THE COMING BATTLE (The Book)
BY
M. W. WALBERT
(There are 483 pages....slow loading....but worth the reading!)
INTRODUCTION.
In this volume the author endeavors to give an accurate history of the present National Bank System of currency, including an account of the first United States Bank,- both of which were borrowed from Great Britain by those statesmen who, like the father of Sir Robert Peel, believed that a national debt was the source of prosperity.
It is believed that the facts adduced in the following pages will be productive of some good, in pointing out the immense evils lurking in that system of banking, a system which has produced panics at will, and which is the active abettor of the stock gamblers, railroad wreckers, and those industrial tyrants of modern times, the enormously overcapitalized and oppressive trusts.
It is sought to point out the great dangers of delegating purely government powers to these greedy monopolists, by which they are enabled to organize a money trust, far more tyrannical than all the other combinations now in existence; and by which they absolutely defy the authority that endowed them with corporate life.
The issue between these banks and the people will be joined in the near future, and the greatest struggle
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the world ever witnessed will take place between the usurping banks on the one hand and the people on the other.
In the nature of things, unjustly acquired power of man over man generally rises to such heights of arrogance, as to eventually create a public opinion that will grind tyranny of every form to atoms, hence, The Coming Battle that will surely take place in the near future and the victory that will be won by justice will be the noblest events in American history.
The Author.
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TABLE OF CONTENTS.
Chapter Page
I. Origin of the Money Power in America 7
II. - Origin of the Present National Ranking System.. 43
III. National Banks and Silver 89
IV. Conspiracy of New York and London Bankers and Bondholders to
Remonetize Silver 109
V. Efforts to Remonetize Silver and Preserve the Greenback 158
VI. The National Banks Wage War Upon the Credit of the United States 203
VII. National Banks Secure a Continuation of Their Existence 236
VIII. The National Banking Money Power Secures Complete Control of the Treasury 270
IX. Money Power of England and United States Combine to Annihilate Silver 304
X. National Banking Money Power Brings on the Panic of 1893 325
XI. Special Session of Congress Repeals the Sherman Law 362
XII. Senate Votes for Repeal 384
XIII. Efforts of Administration to force Carlisle Bill through Congress 407
XIV. National Banks and the Administration Combine to Issue Bonds in Time of Peace 439
XV. Campaigns of 1896 460
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CHAPTER I.
ORIGIN OF THE MONEY POWER IN AMERICA
"Justice, full and ample justice, to every portion of the United States, should be the ruling principle of every freeman, and should guide the deliberations of every public body, whether it be state or national." - Andrew Jackson.
During the existence of the human race, from the earliest dawn of civilization to the close of the present century, the power exercised over the industry, property and conscience of man by cunning and ambition has assumed many forms.
The form of power which first appeared to oppress and plunder the race, was exemplified in those celebrated conquerors of antiquity, who traversed the earth in their bloody careers, transforming blooming fields and rich and populous cities into deserts, overthrowing whole nations, sacrificing on the battle, fields countless myriad's of their fellow men - merely satisfy a species of madness dignified by the name of ambition.
Another and a more dangerous form of misapplied power resulted from the intellectual tyranny exercised by that shrewd class, the priest-hood, over the conscience and religious beliefs of the great mass of mankind.
>From the days of the Pharaohs down to this period, man, from his instinctive veneration for a Supreme Being, has been so peculiarly susceptible to the arts, wiles, and cunning of priest-craft to such a degree as to excite universal surprise.
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Those gross superstitions, engrafted on the inherent religious nature of man, by that wary intellectual superiority, which weighed down the noblest traits of the human mind; which bred bitter religious animosities; unheard of extortion's by the corrupt and infamous priestly aristocracies of various so-called religions, were the well-matured and craftily-devised schemes for plunder by designing men.
It is almost inconceivable that the ancient Egyptians, that admirable race, whose noble genius and wonderful energy reared those stately temples, the magnificent cities, and the stupendous pyramids along the valley of the Nile, should worship the man-eating crocodile, the savage vulture, the grinning ape and the crawling lizard.
This race is an example of that soul-darkening superstition which hung like n pall over the intellect of man.
The countless wars which afflicted Europe, Asia, and Africa for nearly eighteen centuries; which drowned the finest aspirations of humanity in blood; which desolated the fairest parts of the earth; which stemmed the tide toward a higher and a grander civilization, sprang from the base superstitions originated by the grasping priesthood, who lived in sloth and luxury upon the labor of the deluded mass of mankind.
The celebrated Vattel, in the twelfth chapter of that noble work, The Law of Nations, awards us a faint idea of the enormities practiced upon the people of Europe by the clergy.
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Taine, in his History of France, shows that the ecclesiastics had seized upon the most valuable and fertile portion of the territory of that country, and that the oppression practiced by them upon the French people was one of the leading causes of the great revolution.
The third and most insidious and most dangerous form of power that has yet appeared to threaten the material well-being of the race; which new holds every civilized and semi-civilized people in its merciless grasp; which is appropriating to itself the productive energies of the world; which is subordinating the press, the pulpit, and the statesmen of the day to its ambitious ends; which openly boasts of its nefarious methods in the courts, legislatures, and other parliamentary bodies of nations, is the modern money power.
That there is a gigantic combination of the money dealers, a powerful international trust of usurers, asserting a superiority above all jurisdictions, and having for its servants the so-called statesmen and potentates of various nations, who willingly register the decrees of this money power upon the statute-books of the respective states, is a fact that can bc sustained by irrefutable evidence.
This great international monetary trust now menaces the very life of this nation, and the people must dethrone it and subordinate it to their will, or American liberty will vanish.
The Declaration of Independence, which announced the true principles of government, was a memorable protest against the rapacious money power composed of the landed aristocracy, the trading, commercial, and manufacturing interests of England, which, by a long series of vicious and unconstitutional acts of Parliament, sought to eat out the substance of the colonists.
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The war of the Revolution, which followed, set its seal of approval upon the patriotic efforts of the colonists against oppression, and freedom was achieved.
Upon the conclusion of that most righteous conflict, n more perfect union was formed to establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty for themselves and posterity by the adoption of the Federal constitution.
General Washington was chosen the first President by a unanimous vote.
For his constitutional advisers he appointed Thomas Jefferson for Secretary of State; Alexander Hamilton for Secretary of the Treasury; James Knox for Secretary of War; and Edmund Randolph for Attorney General.
Jefferson, who was the most accomplished scholar in America, the profoundest thinker upon the principles of Government of any age, the friend of humanity and a staunch believer in the capacity of the common people for self-government, was a representative of that industrial element which sustains society by its labors.
Hamilton, who was an aristocrat by birth and breeding, and who was connected by marriage with the wealthiest family of the landed aristocracy of New York, was a strong representative of the trading, banking and commercial element of New York City and New England, which constituted the Tory clement of the Revolution.
The presence of two statesmen of such wholly antagonistic views and temperaments in the cabinet of Washington, naturally originated divisions of political sentiment, from which sprang two great political parties.
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One of the first measures which received the aid and sanction of Hamilton was the act of Congress adopted February 25, 1791, chartering the Bank of the United States.
Jefferson, whose penetrating mind perceived the vast power for mischief lodged in an Institution of that nature, in a powerful communication to the President, advised him to veto the bill. Washington, however, accepted the views of Hamilton, his Secretary of the Treasury, and signed the bill, and it became a law.
By the terms of the act incorporating the bank, its capital was fixed at ten millions of dollars. The power to issue its circulating notes as money having full legal tender quality for the payment of taxes and demands due the Government was conferred upon it. It was made the depositary of the revenues of the Government, and therefore it became the fiscal agent of the Treasury department. It was chartered for the period of twenty years. For the extensive powers and exclusive privileges bestowed upon it by Congress, the bank paid the United States a small bonus.
This bank, therefore, was a monopoly sustained by the credit and the revenues of the United States. It had the solo power of issuing legal tender paper money, and its actual capital was trebled in its earning capacity by loaning its circulating notes at interest, and by having the control of the government revenues.
This was the first appearance of an ORGANIZED MONEY POWER in the United States.
Thomas Jefferson, by voice and pen, in language of rare power and felicity, pointed out the dangerous possibilities of the bank to influence the politics and business of the nation.
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In a letter to Madison in 1793, Jefferson stated that the bank party consisted of the fashionable circles of Philadelphia, New York, Boston and Charleston (natural aristocrats). 2. Merchants trading in British capital. 3. Paper men. Against the bank were 1. Merchants trading on their own capital. 2. Irish merchants. 3. Tradesmen, mechanics, farmers and every other possible description of our citizens.
In 18ll, Congress refused to re-charter the bank, and as it had during its brief career obtained the mastery over the entire business of the country by its loans of circulating notes and the public revenues, and had built up a system of credit in the commercial centers, to intimidate Congress and the people, it made a concerted contraction of the currency and brought on the great panic of 18ll.
United States Senator Benton, in a speech in the senate during the administration of Jackson, thus graphically states the manner in which the bank con-trivet to manufacture public sentiment in its favor He says: -
"All the machinery of alarm and distress was in as full activity at that time as at present, and with the same identical effects- town meetings, memorials, resolutions, deputations to congress, alarming speeches in congress. The price of all property was shown to be depressed. Hemp sunk in Philadelphia from $350 to $250 per ton; flour sunk from $ll.00 per barrel to $7.75; all real estate fell thirty per cent.; five hundred houses were suspended in their erection; the rent of money rose to one and a half per month on the best paper; confidence destroyed; manufactories stopped; workmen dismissed and the ruin of the country confidently predicted."
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The Senator goes on to show that great public meetings werc held, inflammatory speeches made, cannon fired, great feasts given - all engineered by the bank. That those members of Congress who favored the bank, traveled with public honors like conquering generals returning from victorious battlefields, saluted with acclamations by the masses, escorted by processions, and that those members favoring the bank were exhibited throughout the United States as though they werc some superior beings from the celestial regions.
In 1812 occurred the second war with England, and the bank threw its whole influence against the United States during that great struggle.
Evidence is not wanting to sustain the charges made that the bank element of New England planned the separation of that section from the Union.
During the continuance of this war, the United States issued its treasury notes with full legal tender power, and they were gladly received by the people.
Albert Gallatin, for twelve years Secretary of the Treasury, and one of the ablest statesmen of the day, thus bears valuable testimony to the efficiency of government paper money in carrying the United States through that war. He says: -
"The paper money carried the United States through the most arduous and perilous stages of the war, and though operating as a most unequal tax, it cannot be denied that it saved the country."
In a letter to John Tyler, May 28, 1816, Jefferson says:-
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"The system of banking we have both equally and ever reprobated. I contemplate it as a blot left in all our constitutions which, if not covered, will end in their destruction, which is already hit by the gamblers in corruption, and is sweeping away in its progress the fortunes and morals of our citizens. Funding I consider as limited rightfully to a redemption of the debt within the lives of a majority of the generation contracting it; every generation coming equally by the laws of the Creator of the world to the free possession of the earth He made for their subsistence unincumbered by their predecessors. And I sincerely believe with you that banking institutions are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale."
In a letter of March 2, 1815, written by Jefferson to the celebrated French author, Say, he said: -
"The government is now issuing treasury notes for circulation, bottomed on solid funds and bearing interest. The banking confederacy and the merchants bound to them by their dcbts will endeavor to crush the credit of these notes; but the country is eager for them as something they can trust to, and so soon as n convenient quantity of them can get into circulation the bank notes die."
It has been stated that the bank, during the war of 1812, exerted its whole influence against the United States. It was a matter of little concern to it that Great Britain had impressed into her service thousands of native born citizens of this country, and compelled them, against their will, to man British guns. What cared the bank that hundreds of American merchant vessels were confiscated, in a time of profound peace, by orders of the English government, and that repeated insults had been heaped on this republic by the insolence of British statesmen?
Although the bank was a creature of the legislative powers of congress, and had received vast financial benefits from the country, it sought to embarrass the government in its struggle against Great Britain by arraying the moneyed class against the struggling republic.
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Money could not be obtained by means of loans to organize, arm, and equip the American armies and to construct vessels of war to protect American commerce. In this emergency the counsel of Jefferson was requested, and he advised the issue of treasury notes by the government in lieu of borrowing.
In a letter dated September ll, 1813, he thus stated his position: "The question will be asked, and ought to bc looked at, What is to be the course if loans cannot be obtained?" There is but one - "Carthago delenda est." Bank paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs. It is the only fund on which they can rely for loans; it is the only resource which can never fail them, and it is an abundant one for every necessary purpose. Treasury bills, bottomed on taxes, bearing or not bearing interest, as may be found necessary, thrown into circulation will take the place of so much gold and silver, which last, when crowded, will find an efflux into other countries and thus keep the quantum of medium at its salutary level. Let the banks continue, if they please, but let them discount for cash alone or for treasury notes."
The sound advice couched in this letter was heeded by the government, and the country was carried safely through the second war for independence.
Immediately after the close of the war, the bank put forth renewed efforts to secure a new charter.
At this juncture, William Cobbett, the celebrated English writer and economist, transmitted a letter to
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Mr. Dallas, Secretary of the Treasury under President Madison, in which he strenuously urged him to oppose the project.
As a warning against chartering a bank of issue, Cobbett pointed out the immense power of the Bank of England to ruin the tradesmen of that country, and to dictate the political sentiments of that people. He said: -
London, January 13, 1816.
"To Mr. Secretary Dallas:
"Sir: I have read with great care and uncommon interest your proposition to congress, under date of 6th December, 1815, for the establishment of a national bank; and as a part of the reasons which you urge in support of that proposition appear to bc founded on the experience of a similar institution in England, I cannot refrain from endeavoring to show you what some of these effects really have been, and what is at present the situation of this country, owing, in a great measure, to the existence of a great banking establishment closely connected with the government.
"It is the evil of a national bank, as experienced by us, to which I particularly wish to draw your attention. You profess, and I dare say very sincerely, so to frame this establishment in America that it shall bc independent of the Government. It is next to impossible, indeed, that you, or any of the persons in whose hands the Government is, should have a desire to make a bank what our bank has long been; but while there is a possibility of its becoming, in any hands or at any time, anything resembling this bank, it must be a matter of serious dread to every friend of America that such an establishment is likely to take place. Sir, it is as a bank of discount that this establishment exercises the most pernicious influence. The directors, who are a chosen divan, regulate these discounts, and in so doing decide in some sort upon the rise or fall, the making or the ruin, of all men in trade, and indeed 17 of most other men, except such as have no capital at all.
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"The amount of these discounts at any given time is supposed to bc about L6,000,000, as they are never for more than two months. Here is a sum of thirty-six millions lent every year to individuals. The bills for discounts are sent in; the directors consent or not, without any reasons assigned. Now, sir, consider the magnitude of the sum discounted. It is little short of half a million dollars a day, Sundays excepted. It is perfectly well known to you that in state of such things almost every man in trade is under the necessity of having a regular supply from discounting. If he be excluded from his fair share here, he cannot trade with the same advantage as other men trade. If he be in the practice of discounting, and if his discounts be cut off, he cannot go on; he stops payment and is frequently ruined forever, even while he possesses property which, with the fair chances of time, would not only enable him to pay his debts but to proceed in prosperity.
"I beseech you, then, sir, to look seriously at the extent of the dangerous power of these bank directors. You must see that they hold in their hands the pecuniary fate of a very large part of the community, and that they have it in their power, every day of their lives, to destroy the credit of many men, and to plunge their families into shame and misery. If I am asked for their motives to act like these, to pursue such partiality, to make themselves the instruments in committing such detestable injustice and cruelty, need I point out to you that they have been and must be constantly actuated by the strongest political prejudices? The fact is, however, that the Bank of England, by means of its power of granting or withholding discounts, has been, and is one of the most potent instruments of political corruption, on the one hand, and of political vengeance on the other hand."
In speaking of the great profits reaped by that bank, this writer said: -
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"I have given this rough statement that you may be struck with the magnitude of the object I present to you. Diminish the amount as much as you fairly can and even then you will dwell upon the subject with a deliberation you cannot prevent. One fact will at least corroborate what I have suggested; viz., that the Bank of England had L20,000,000, or nearly $100,-000,000, surplus in nineteen years, after paying bonuses and dividing 7 per cent, per annum, which was two fifths more than legal interest. I will not here allude to the United States Bank, to which I may hereafter devote an essay. "
The array of facts set out by this writer, in which he exhibited the appalling power of this bank, did not deter the American statesmen of that day from their attempt to fasten a like institution on this country.
In 1816, congress chartered the United States Bank with a capital stock of thirty-five million dollars; to it was delegated the sole power of issuing notes receivable by the United States for taxes and demands due it; and designed to serve as the Treasury Department of the government by receiving and disbursing the public revenues of the nation.
Section 21 of the Bank Act was as follows: -
"That no other bank shall be established by any future law of the United States, during the continuance of the corporation hereby created, for which the faith of the United States is hereby pledged. Provided, Congress may renew existing charters for banks within the District of Columbia, not increasing the capital thereof, and may also establish any other bank or banks in said District, with capitals not exceeding, in the whole, six millions of dollars, if they shall deem it expedient."
By this section Congress surrendered its constitutional powers to legislate upon a subject within its exclusive jurisdiction for the period of twenty years, Not satisfied with a monopoly of the currency and banking of the country, the unlimited greed of the wealthy stockholders of this bank demanded and secured frown Congress, a pledge of the public faith that the essential powers of the Government should lie dormant for twenty years!
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In the early days of the republic, the accursed spirit of special privileges had shorn the nation of its means of self-preservation.
For the exclusive powers conferred upon it, the government received in return for this valuable franchise a small annual bonus.
It will be ascertained from the enormous powers enjoyed by the bank, that it obtained a monopoly of the circulating medium of the country; that, in addition to its capital stock of thirty-five million dollars which constituted its primary loanable fund, it would earn interest upon the circulating notes issued by it, as wcll as usury upon the government revenues when used in discounts.
Therefore, by force of law, the interest earning capacity of its capital was morc than doubled.
It was a colossal moneyed monopoly.
The bank rapidly obtained a practical control over the business of the nation, and it would tolerate no opposition. By its methods of conferring substantial favors upon the influential journals of the leading commercial cities, and by its loans to powerful members of both branches of Congress, it was enabled to rally to its support a coerced and manufactured public sentiment - far-reaching and wide-spread as the limits of the Union.
The financial power of the bank, under its able and unscrupulous management, had become so dominant in its influence that it deemed itself master of the government and the people.
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This monopoly believed in the Hamiltonian maxim that a "Public debt is a public blessing," and, during its career as the fiscal agent of the Government, threw every obstacle in the way of the payment of the national debt.
It may be inquired by some why the bank should oppose the payment of the debt? The reason is obvious. The larger the debt, the more revenues necessary to pay the interest charge thereon, and, therefore, the more profit to the bank from the use of the increased revenues in making loans and discounts.
>From 1816 to 1828, it was the sole arbiter of the financial affairs of the nation, both public and private. Its power in politics was immense, and it swayed elections at will.
The most eloquent Senators and Representatives were continually sounding its praises in the halls of Congress as the most perfect financial institution ever devised by the wit of man. Deluded with the idea that it was invincible in its influence, and that it was a necessary part of the machinery of Government, it was confident that its charter would be renewed before its expiration by limitation of law.
The audacity of the bank was destined to receive a check in its career of uninterrupted power and success, and its astonishing abuses of its franchise where to be mercilessly exposed, and it was doomed to fall never to rise again.
In the presidential election of 1828, Andrew Jackson, the hero of New Orleans, was elected chief magistrate by a great majority, and the bank, its defenders, and retainers, were fated to run counter to a patriot and statesman of invincible will and unflinching integrity.
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At the time of this election, and prior thereto, the public debt was being reduced rapidly, and it would not be long before the United States would not owe a single dollar.
As has been stated, the United States bank strongly opposed the payment of the debt for the aggrandizement of its own selfish purpose.
On the 8th day of December, 1829, President Jackson, in his first annual message to Congress, announced to that body that he was opposed to the bank, and that he would not favor a renewal of its charter. In the year 1830, a large surplus of public revenues accrued to the United States, and according to law, the money was deposited in the bank. This accumulation of revenues served to augment the power of the bank as it increased its resources, and, therefore, its facility to make additional loans and discounts in the various commercial centers of the country.
President Jackson discerned the policy of the bank, and in 1830 he advocated the passage of a law distributing these surplus revenues among the states. He again opposed the renewal of its charter.
United States Senator Benton, of Missouri, a man of great energy, extensive learning, and commanding ability, thoroughly understood the means by which the bank had obtained its mastery over the commerce and industry of the nation, and, therefore, at that session of congress, he presented a resolution in the United States senate to the effect, that the charter of the bank ought not to bc renewed. The resolution was lost by a vote of twenty-three to twenty. The introduction of that resolution and the narrow majority by which it failed of passage, sounded a note of warning to the bank, and it gathered all its energies for the struggle that sooner or later was bound to come.
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To arouse public sentiment in its behalf, it initiated a policy of expanding its loans until they reached the vast total of seventy-one million dollars, which were so judiciously placed among leading merchants and manufacturers, that, in the event of their being called in by the bank, a powerful pressure would bc exerted upon the President and Congress by those who were borrowers of the bank.
On the 4th of July, 1832, a bill to re-charter the bank, after its passage by Congress, was sent to President Jackson for approval.
Many of the influential political friends of the President, aware of his intense hostility toward the bank and its methods, importuned him to sign the bill; large delegations of leading citizens from every trade center in the country implored him to allow the measure to become a law. Merchants and importers, who were heavy borrowers from the bank, trooped to Washington to add their appeals to the petitions already presented.
Its paid hirelings, in the halls of congress and elsewhere, predicted dreadful results to business interests, should the President not recede from his opposition to the bill continuing the existence of the bank for the period of twenty years longer.
To add to the general clamor, the bank, through its officials, avowed its purpose to precipitate a panic, and to pull down in ruins the business of the country, should its demands not be concealed. It compelled its thousands of borrowers to sign distress petitions, which it caused to be sent to the President as the apparently free expression of public sentiment.
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The magazine had long been prepared by the bank, the train was laid, and Nicholas Biddle, the president of this great financial institution, sat in his luxurious office, and declared himself ready and willing to apply the match that would start the most ruinous financial explosion that had yet shook the foundations of the republic. Mr. Biddle had most able lieutenants in both branches of congress devoted to his interest.
Daniel Webster, the eloquent orator and great lawyer; Henry Clay, whose persuasive powers were unrivaled; and Calhoun, the great leader of the South, led the banking interest in congress.
In a work entitled, "Andrew Jackson and the Bank of the United States," William L. Royall thus speaks of the conduct of these three leaders: -
"In addition to all its other sources of power the cause of the bank received invaluable assistance from the coalition of these great men (Webster, Clay, and Calhoun). Each was an aspirant for the presidency, and upon the bank's cause and paper money, each found a common ground upon which all three could meet and oppose Jack on, the great enemy of both these things. All the movements of the bank were but a repetition, with a change of names and dates, of what had taken place on 18ll."
On the other hand, the stalwart Benton was a stern opponent of the bank, and he was supported by an able array of statesmen of the first rank.
Webster, and Clay advocated a liberal construction of the Constitution, and were eternally sounding the praises of that instrument as the noblest work of statesmanship, yet, while ascribing to it the most ample powers and authority, they strangely supported the theory that the United States Bank was absolutely necessary to the financial administration of the Federal Government.
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Benton was a strict constructionist, and asserted that the general Government was inherently qualified to transact its financial operations without the aid or assistance of any bank or system of banks. He ably maintained the Jeffersonian principles of Government that bank paper should be suppressed.
In a speech delivered in the United States Senate, Benton thus truly describes the immense power of the bank over the Government and the people: -
"The Government itself ceases to be independent, it ceases to be safe when the national currency is at the will of a company. The Government can undertake no great enterprise, neither war nor pence, without the consent and co-operation of that company; it cannot count its revenues six months ahead without referring to the action of that company - its friendship or its enmity, its concurrence or opposition - to sec how far that company will permit money to be scarce or to bc plentiful; how .far it will let the money system go on regularly or throw it into disorder; how far it will suit the interest or policy of that company to create a tempest or suffer a calm in the money ocean. The people are not safe when such a company has such a power. The temptation is too great, the opportunity too easy, to put up and put down prices, to make and break fortunes; to bring the whole community upon its knees to the Neptunes who preside over the flux and reflux of paper. All property is at their mercy, the price of real estate, of every growing crop, of every staple article in the market, is at their command. Stocks are their playthings - their gambling theater, on which they gamble daily with as little secrecy and as little morality and far morc mischief to fortunes than common gamblers carry on their operations."
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This unanswerable argument, built on impregnable facts, could not be met by all the eloquence and logic that could be mustered against it by the great Triumvirate - Clay, Webstcr and Calhoun.
In a message to Congress, President Jackson, in speaking of the banking power, said: -
"In this point of the case the question is distinctly presented, whether the people of the United States are to govern through representatives chosen by their unbiased suffrages, or whether the power and money of a great corporation are to be secretly exerted to influence their judgment and control their decisions."
These pointed shafts from the executive struck home, and rankled in the breasts of those Senators and Representatives who supported the bank and its policy.
When the bank ascertained beyond any doubt that President Jackson was firmly opposed to its further continuance, it began calling in its loans rapidly, the volume of currency was contracted greatly by the bank and its branches, merchants were mercilessly driven to the wall, mills and factories closed down everywhere, and tens of thousands of skilled workmen were thrown out of employment, and their families felt the pangs of hunger, notwithstanding there was abundance in the country.
Every day it tightened its coils around its helpless victims, while President Biddle sat in his office at the bank, and laughed at the needless ruin he wrought among his fellowmen. His course is only paralleled by that of Nero, who is said to have fiddled while Rome was burning.
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The great journals of the leading cities, subsidized by loans - presumably - teemed with editorials denouncing President Jackson anti defending the course of the bank.
Distress meetings at the same time and at the same points were held, fiery speeches were made, and strongly worried resolutions were adopted, requesting the President to append his signature to the bill renewing the charter of the bank.
There was a singular identity in the editorials written, in the speeches delivered, and in the resolutions adopted, that gave evidence of a concerted action. This similarity of sentiments and language in the journals, speeches, and resolutions, evinced a most remarkable talent, for combining the various means of influencing President Jackson.
But the hero of New Orleans was as immovable as the Rock of Gibralter.
Andrew Jackson was in many respects the most remarkable man in American history. A sincere patriot of the purest integrity, with a clearness of mental vision that was unsurpassed, with a profound insight into the principles upon which our Government rested, he plainly saw that the interests of the bank were wholly at variance with that of American liberty.
He well knew that to transfer to a private corporation for its gain, the issuance and control of the currency of the country, and to accumulate in its vaults the national revenues, would eventuate in building up a moneyed monopoly, ultimately controlling the press, the business interests, and the legislation of the nation.
That point was now reached.
He was utterly opposed to the Government abdicating its highest sovereign function,- the issuance and control of the currency,- and delegating it to individuals or to corporations for their gain.
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He was conversant with the traitorous conduct of the bank during the war of 1812, and he concurred in the declaration of Jefferson that, "Banks of issue were more dangerous to the liberties of the people than standing armies. "
In speaking of the firmness displayed by President Jackson against the arrogance of the bank, the distinguished historian Bancroft says: -
"When the period for addressing Congress drew near, it was still urged that to attack the bank would forfeit his popularity and secure his future defeat. The President replied, 'It is not for myself that I care.' It was urged that haste was unnecessary, as the bank had still six unexpired years of chartered existence. 'I may die,' he replied, 'before another Congress comes together, and I could not rest quietly in my grave, if I failed to do what I hold so essential to the liberty of my country.' "
Bancroft further says, that, upon one occasion when the bank conflict had reached its greatest height, the President and some of his friends were standing over the rocks of the Rip Raps, looking out upon the ocean, when the subject of chartering the bank was brought forward, whereupon the President remarked, "Providence may change my determination; but man no more can do it than he can remove these Rip Raps, which have resisted the rolling ocean from the beginning of time."
History fails to record a nobler sublimity of purpose than that displayed by President Jackson during the war of the bank upon the people.
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Notwithstanding the immense prcssure brought to bear upon him, President Jackson, on the 10th day of July, 1832, returned the bill to the Senate, whence it originated, accompanied with his veto message, which was a masterly exposition of his views upon the true principles of free Government, and it ranks in importance with the Declaration of Independence.
The first reason assigned by the President in his objections against the 'renewal of the charter of the bank was, that it created a monopoly under the authority of the general Government, and, therefore, it increased the value of its stock far above its par value, which operated as a gift of many millions to its stock holders.
The President laid down the fundamental principle, that a monopoly should only bc granted when it returned a fair equivalent to the people.
He showed that while its capital stock was fixed at $28,000,000, to confer this privilege upon the bank would add the enormous sum of $17,000,000 to the value of the stock, and for this immensely valuable franchise the Government would receive the pitiful sum of $200,000 per annum.
The President advocated the sale of the stock to the highest bidder, and that the premium received there from by the Government be paid into the national Treasury to lighten the burdens of taxation in lieu of its bestowal upon a few wealthy citizens.
He stated that $8,000,000 of the stock of the present bank was held by foreigners, chiefly in England; that this was the most dangerous feature of the plan; that a majority of the shares of its stock might fall into those alien hands, and that in the event the United 29
States would be involved in war with that nation, thus holding a large amount of the stock of this great bank monopoly, its influence would be thrown against the United States.
29
The President says: -
"All its operations within would be in aid of the hostile fleets and armies without. Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence, it would be more formidable and dangerous than the naval and military power of the enemy."
He produced figures demonstrating the sectional character of the bank, that out of $35,000,000 of stock, $8,405,500 were held chiefly by Great Britain; only $140,200 were held by the nine great western states; $3,455,598 in the four southern states, and $13,522,000 in the eastern and middle states.
That in 1831, the profits of the bank were $3,455,598 of this amount the western states contributed $1,640,048; the four southern states $352,507, and the middle and eastern states $1,463,041.
It will be ascertained that under the operations of this banking monopoly, the agricultural states of the West were paying heavy tribute to the East.
It was further pointed out by the President, that the principle of taxation involved in the bill was radically Wrong in this: that only the stock could be taxed where held, Therefore, while the nine western states paid $1,640,048 in profits to the bank, only $140,200 of its stock was held there subject to taxation; that, in the year 1831, the branch bank at Mobile earned dividends of $95,140, yet the state of Alabama could not tax the property of the bank, because net a single share of its stock was owned in its jurisdiction.
30
The foreign stock holders could not be taxed a single penny on their holdings, as they were beyond the taxing power of the United States. The foreign stock holder would be drawing large dividends from the America people without bearing any of the burdens of government. This would tend to alien ownership of this bank, non-contribution to the- burdens of Government creating this valuable privilege, and a continued drainage of specie to foreign nations.
The fourth section of the proposed law provided: -
"That the bills and notes of said corporation, although the same be, on the faces thereof, made payable at one place only, shall, nevertheless, be received by the said corporation at the bank or at any of the offices thereof, if tendered in liquidation or payment of any balance or balances due to said corporation, or to such office of discount and profit from any other incorporated bank."
The right thus conferred upon state banks to pay their debts to the United States Bank, with the notes and bills of any branch bank thereof, would tend to unify the whole banking interest of the nation into a powerful combination, while at -the same time, any individual who held currency issued by a branch of the United States Bank, situated at any other place than his residence, was deprived of that right, therefore, be would be compelled to discount the bills of the branch bank, or transmit them to Philadelphia to obtain the cash for them.
These were a few of the reasons assigned by the President in his famous veto message.
It is now conceded by the most eminent historians of America, that General Jackson, in throttling the corrupt and unscrupulous money power of that day, saved the nation.
31
On the 8th of January, 1815, General Jackson had met the veterans of Wellington at New Orleans, and inflicted upon them the most disastrous defeat ever suffered by England, and shed undying renown upon American arms. He saved America then, and he preserved its independence in 1832.
By act of Congress, June 28, 1834, a change was made in the coinage laws of April 2, 1834 atter act, the legal ratio of silver to gold was fixed at fifteen to one, that is, fifteen pounds of pure silver were the legal equivalent of one pound of pure gold, and this ratio was maintained until the passage of the act of June 28, 1834.
France and the other Latin States maintained a legal ratio of fifteen and one half to one. Consequently the United States over-valued silver when compared with gold. The bullion dealers, over on the alert for a profit, sent the gold abroad and sold it at a premium. To remedy this, the act of June 28, 1834, reduced the quantity of gold in the gold eagle from 2471/2 grains of pure gold to 232 grains, or a reduction in the ten dollar gold piece from 270 grains of standard gold to 258 grains. A corresponding reduction was made in the half-eagle and quarter-eagle. A fraction over six per cent of gold bullion was therefore deducted from the gold coins. This made the legal ratio of silver to gold stand at sixteen to one. By this act, silver was undervalued and gold made its appearance in circulation, and silver disappeared from the channels of trade.
The object of the passage of this law was to supersede the United States Bank bills by the substitution of gold coin as a circulating medium. The people remembered the great efforts of the bank to monopolize the entire volume of money in the country, and gladly received the two and one half, five and ten dollar gold pieces in preference to bank notes.
32
This substitution of gold coin for bank notes greatly diminished the profits of the bank, and it immediately declared war upon that coin. Its subsidized press, its minions and dependents denounced this species of money in terms of ridicule. The subservient tools of the bank, when offered gold coin in the ordinary transactions of business, would shudder and recoil at its appearance, and demand United States bank notes as the superior money.
In the meantime, however, in 1832, a presidential election was held. Henry Clay was put forward as the candidate of the Whigs and of the bank power. Andrew Jackson was the candidate of the Democratic party, and represented the principles of Jefferson. Jackson received two hundred nineteen electoral votes to forty-nine for Clay. The prophecies of those Democrats that Jackson had ruined the party by his contest with the bank were refuted by a decisive vote of the people.
REMOVAL OF THE GOVERNMENT DEPOSITS
The next step taken by the President to curtail the power of the bank for mischief, was the removal of the government deposits amounting to many millions of dollars.
After the bank so signally failed to obtain a renewal of its exclusive banking privileges, it did not alleviate from its policy of inflicting distress and ruin upon the people.
33
>From the 1st day of August, 1833, to the 30th of June, 1834, it continued its contraction of the currency by calling in its loans, giving as its reasons therefor, that the Government was harassing it on every hand. It had ample time in which to arrange its affairs without seriously crippling the business of the country and its excuse was not valid.
Although many millions of public revenues were under its sole charge, constituting a loanable fund for the benefit of the bank, its hireling press teemed with abuse against the administration of President Jackson.
The President, in view of all the facts within his knowledge, entertained the opinion that the bank was insolvent, and an unsafe depository for the public moneys. He had previously communicated his belief to Congress as to the unsafe condition of the bank, but such was its influence in that body, that the House of Representatives, by a practically unanimous vote, declared its confidence in the institution.
In the lawful exercise of his powers, the President ordered the Secretary of the Treasury, through the five government directors, to investigate its financial condition. The directors made a demand upon the bank for an inspection of its books, but they were denied access to them, In the face of the obstacles thrown in their way to ascertain its true condition, the directors made an investigation with astonishing results.
34
To obtain a ful1, true, and complete statement of the expenditures of the bank for political purposes, the official directors submitted a resolution to the full board of the bank, requesting the cashier to furnish a statement to the board, as early as possible, showing what amount was paid out for certain purposes, the sums of money paid to each person, the quantity and names of documents furnished by him, and his charges for the distribution of them. Similar statements were requested from the various branch offices of the bank. The resolution was voted down by the board of directors, and a substitute was adopted expressing inexplicit confidence in the course of its president - Nicolas Bible.
Subsequent events gave satisfactory explanation why the officials of the bank pursued That course in refusing an inspection of the books. Upon a report of the government directors setting forth these facts, the President assumed the responsibility of removing the public moneys from the bank, and distributed them among the various state banks.
In this course he met decided opposition to this order in his cabinet. The Secretary of the Treasury, William J. Duane, peremptorily refused to obey the command of his chief, and for this act of insubordination he was summarily removed from his office.
Attorney General Taney was appointed to fill the vacancy occasioned by Duane's removal, and the order was executed to the letter.
The bold stand taken by the President in the removal of the deposits, stirred up the wrath of the bank party in Congress, and Henry Clay offered a resolution in the United States Senate as follows: -
"Resolved, That the President in the late executive proceeding in relation to the public revenue, has assumed upon himself authority and power not conferred by the constitution and laws, but in derogation of both."
This resolution censuring President Jackson was adopted by the Senate on the 28th of March, 1834.
35
The bank pointed to this action of the senate as proof of its great power.
On the 15th day of April, 1834, President Jackson transmitted a message to the Senate, respectfully protesting against this implied impeachment of his official acts. His communication to that body was a magnificent exposition of constitutional law, and he severely arraigned the senate for passing judgment upon him without granting him an opportunity to be heard in his defense.
Three years afterward the resolution of Clay was expunged from the journals of the senate.
The President was fated to emerge triumphant from every contest with the banking power.
The bank still continued its warfare upon the people. It avowed its purpose to precipitate a
wide spread panic. It announced its intention to crush the business of the nation, unless the order of removal was recalled, and the deposits restored. The pressure brought to bear by the bank was directed at the chief commercial and industrial centers. The havoc wrought by-it was as broad, as the range of its operations, and its course was sustained by politicians as one of self defense.
Public men who were deeply indebted to it openly upheld its conduct. One of these purchasable demagogues owed the bank the great sum of $100,000, and his defense of his owner was in direct proportion to his obligation to his master - the bank. One loan of $1,100,000 was made by it to a broker in New York City, at which time it was steadily contracting the currency at every point where it was represented by an office. The broker to whom this immense loan was made, accumulated a fortune by speculating with this money upon the misfortunes of others.
36
Distress meetings were held everywhere under the auspices of the bank, resolutions were adopted, and memorials were presented to the President, requesting him to rescind his order of removal, but without avail.
The presidents, vice-presidents, and various other officers of the so-called distress meetings were selected from those who had supported Jackson for the presidency, which fact was always announced to the people. The petitions, memorials, and remonstrances presented to the President but served to strengthen his determination to crush the bank, and the last fangs of the oppressors were pulled by the removal of these deposits amounting to $40,000,000.
It must be borne in mind, that during the administration of Jackson, a controversy arose between the United States and France with reference to the depredations committed upon our merchant marine by the latter nation during the Directory. A treaty had been concluded by the administration with the kingdom of France on the 4th of July, 1831, by the provisions of which, the latter power agreed to pay the United States the sum of $5,000,000, as indemnity for such depredations.
The French authorities failed to pay the first installment thereof, and the Secretary of the Treasury, under the direction of the President, drew a bill of exchange upon France for the amount. The bill was transmitted to Paris through the United States Bank as the fiscal agent of the Government. The authorities of France refused to honor the bill, and it was protested, whereupon the bank seized upon the Government funds in its
37
possession to the amount of $170,040 which it claimed as damages for the protestation of the bill. This high handed procedure was clearly illegal on the part of the bank, and violative of the Constitution which provides that no money shall be drawn from the treasury, except through appropriations made by Congress.
To force a suspension of specie payments by state banks of issue, it drew immense bills of exchange on Paris, where it had no money, for the payment of them, then drew vast sums of specie out of the banks of New York City, and transmitted it to Paris to meet the bills so drawn by it.
In speaking of the course of the bank, in attempting to force a suspension of specie payments by the state banks of issue, Mr. Royall says: -
"It was certainly not too good to do so, and in the year 1841, just before it finally expired, it is proved to have attempted to create a general suspension, by forcing the banks of the city of New York to suspend. The manner of this attempt was afterward related by its cashier. It consisted in selling bills in unlimited quantities on Paris - at this time in great demand - where it had not a cent to meet them, and drawing the coin with the proceeds of these sales out of the New York banks and shipping it abroad to meet these bills as they made their appearance there. The bills, however, got to Paris before the coin, came back protested, and the great bubble was finally pricked."
This act was committed by the bank to embarrass the government, to emphasize the panic than beginning to rage, and to bankrupt the business interests of the nation.
In short, no trick, device, or artifice was too villainous or traitorous for the bank to injure the credit of the Government and the happiness of the people.
38
The bank again failed to obtain a charter in 1841.
The rottenness of the bank then became known, and a complete investigation into its management from 1830 to 1836, instituted by the stockholders, developed an astonishing degree of villainy, corruption, and rascality that was appalling, and the results of which more than sustained the charges brought against it by President Jackson and his supporters.
It was discovered that hundreds of thousands of dollars were expended by President Biddle in influencing elections, subsidizing the press, and bribing members of Congress.
The stockholders, on the completion of this investigation, instituted a suit against President Biddle in the United States circuit court at Philadelphia, for the sum of $1,018,000 expended by him for which no vouchers could be found.
It was further demonstrated that, from 1830 to 1836, during the struggle of the bank for a new lease of corporate life, loans, aggregating more than $30,000,000, were. made by its president to members of Congress, editors of newspapers, politicians of all grades, jobbers and brokers, mostly without security.
Perhaps all the facts connected with its management were never made known, on the ground of public policy, as the reputations of many eminent men, not excepting presidential candidates, would have been utterly ruined.
In speaking of the contest between the bank and President Jackson, Parton, the biographer, says: -
"In these Jacksonian contests, therefore, we find nearly all the talent, near1y all the learning, nearly all the ancient wealth, nearly all the business activity,
39
nearly all the book-nourished intelligence, nearly all the silver-forked civilization of the country, united in opposition to General Jackson, who represented the country's untutored instincts."
Parton further says that Jackson was called a murderer, a traitor, an ignoramus, a fool, a crook-back, a pretender, and various other vile names.
Nicolas Biddle, who, to a very large extent, was responsible for the gigantic conspiracies, bank-panic with their resultant ruin and misery, was driven in disgrace from his exalted position, and he died a shameful death almost unknown, unhonored, and unsung.
The man before whom bowed in fawning adulation great and wise statesmen, merchant princes, editors of powerful journals, and leaders of public opinion; he, who, in the magnitude of his financial plans and undertakings, rivaled the money kings of Europe; he, who arrayed dollars against the immutable principles of justice and the rights of man, lived to see his name become a by-word, a hissing, and a reproach.
The career of the United States Rank and its president is an awful monument of warning on the highway of time to come, an object lesson to that colossal greed of power, which, to tighten its grip upon the people, scatters distress and ruin in its train, and which, from its ramparts of ill-gotten wealth obtained by monopoly and special privileges, defies the laws of man and the laws of God.
On the other hand, the fame of Jackson shines more and more with the lapse of time.
Thomas Jefferson, the founder of American Democracy, and the friend of the human race, is honored as
40
the great constructive statesman of America; Andrew Jackson is revered as that great leader who regenerated the politics of his country, and rescued a people from financial slavery. During his administration, the public debt was wholly paid, a large surplus of public revenues accumulated to the credit of the United States, the money power was dethroned, the American nation was honored everywhere, 'and he retired from the presidency amid the plaudits of his countrymen.
In his farewell address to the people, March 3, 1837, he solemnly warned them against the money power, that special privileges must not be granted to any class of citizens, and that justice must be the basis of public and private conduct.
In this noble document, the President admonishes the people to be on their guard against the money power. He says: -
"But when the charter for the bank of the United States was obtained from Congress, it perfected the paper system, and gave to its advocates the position they have struggled to obtain from the commencement of the Federal Government down to the present hour. The immense capital and peculiar privileges bestowed upon it, enabled it to exercise despotic sway over the other banks in every part of the country. From its superior strength it could seriously injure, if not destroy, the business of any one of them that would incur its resentment; and it openly claimed for itself the power of regulating the currency throughout the United States. In other words, it asserted (and undoubtedly possessed) the power to make money plenty or scarce, at its pleasure, at any time, and in any quarter of the Union, by controlling the issues of other banks, and in permitting an expansion, or compelling a general contraction of the circulating medium according to its own will.
41
"The other banking institutions were sensible of its strength, and they soon became generally its obedient instruments, ready at all times to execute its man-dates; and with the other banks necessarily went also that numerous class of persons in our commercial cities who depend altogether on bank credits for their solvency and means of business, and who are therefore ' obliged, for their safety, to propitiate the favor of the money power by distinguished zeal and devotion in its service, The result of the ill-advised legislation which established this great monopoly, was to concentrate the whole moneyed power of the Union, with its boundless means of corruption, and its numerous dependents, under the direction and command of one acknowledged head; thus organizing this particular interest as one body, and securing to it unity of action throughout the United States, and enabling it to bring forward, upon any occasion, its entire and undivided strength to support or defeat any measure of the government. In the hands of this formidable power, thus perfectly organized, was also placed unlimited dominion over the amount of circulating medium, giving it the power to regulate the value of property, and the fruits of labor in every quarter of the Union; and to bestow prosperity, or bring ruin upon any city or section of the country as might best comport with its own interests or policy.
"We are not left to conjecture how the moneyed power, thus organized, and with such a weapon in its hands, would be likely to use it. The distress and alarm which pervaded and agitated the whole country, when the Rank of the United States waged war upon the people in order to compel them to submit to their demands, cannot yet be forgotten. The ruthless and unsparing temper with which whole cities and communities were oppressed, individuals impoverished and ruined, a scene of cheerful prosperity suddenly changed into one of gloom and despondency, ought to
42
be indelibly impressed on the memory of the people of the United States. If such was its power in a time of peace, what would it not have been in a season of war, with an enemy at your doors. No nation but the freeman of the United States could have come out victorious from such contest; yet, if you had not conquered, the Government would have passed from the hands of the many to the hands of the few; and this organized money power, from its secret conclave, would have dictated the choice of your highest officers, and compelled you to make peace or war, as best suited their own wishes. The form of your Government might for a time have remained, but its living spirit would have departed from it."
The wise counsel coached in these golden words of President Jackson are now morc applicable than when uttered by him.
In the election of 1836, Martin Van Buren succeeded Jackson in the presidency. The panic engineered by the bank enveloped the people, and the whole system of credit built up by it fell with a crash. In fact the bank had so shrewdly manipulated the volume of money, and so absolute was its control over it, that society had resolved itself into two classes, a creditor class, small in numbers, but powerful in influence; a debtor class, constituting a great majority of the people, but helpless in the grasp of the creditor class.
One was the master, the other the servant.
During the administration of Van Buren, the Independent Treasury Bill became a law.
Thus the work begun by Jackson in-crushing the bank, was consummated by the separation of the public moneys from those of the banks - a most salutary reform.
43
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CHAPTER II.
ORIGIN OF THE PRESENT NATIONAL BANKING SYSTEM
"She is not dead, but holding her capital and stock holders together under a state charter, she has taken a position to watch events and also to profit by them. The Royal tiger has gone into the jungle; and, crouching on his belly, he awaits the favorable moment emerging from his covert and springing on the back of the unsuspicious traveler." - Thomas H. Benton
"Bank paper must be suppressed and the circulation restored to the nation to whom it belongs.
"The power to issue money should be taken from the banks and restored to congress and the people.
"I sincerely believe that banking establishments are more dangerous than standing armies.
"I am not among those who fear the people. They and not the rich, are our dependence for continued freedom. And to preserve their independence, we must not let our rulers load us with perpetual debt.
"Put down the banks and if this country could not be carried through the longest war against her most powerful enemy without ever knowing the want of a dollar, without dependence upon the traitorous class of her citizens, without bearing hard upon the resources of the people or leading the public with an indefinite burden of debt, I know nothing of my countrymen."- Thomas Jefferson.
In the preceding chapter, the career of the United States Bank was traced from its origin to its downfall.
It was there shown that the United States, by transferring its sovereign power of issuing currency to accumulate as money among the people, and delegating
44
to a private corporation, had, in a period of less than fifty years, built up a monopoly that threatened to pull down the pillars of the republic.
That the panics of 1811, 1833, and 1837-41, with their consequent ruin of tens of thousands of industries, with the attendant circumstances of hunger, suffering, and starvation, werc designedly produced by the bank to overawe Congress and the President.
That it secured the powerful political influence of Webster, Clay, and Calhoun on the floor of the United States senate as the champions of its interests.
That the press of the country, to a very large extent, succumbed to its moneyed influence.
That it attempted to crush the beneficient administration of President Jackson.
We now come to consider a system of national banking, compared with which, the old United States Bank was a pigmy.
In 1861, when the Southern states attempted to withdraw from the Union, the result was that great conflict known in history as the civil war. Throughout its progress, the mass of the people werc intently engaged with the gigantic operations constantly carried on during that period, and, therefore, little attention was paid by them to the financial legislation, enacted by Congress.
When the North and the South were marshaling their respective armies to determine the question of military supremacy, the weight of foreign influence was thrown to the southern cause. Great Britain, from her antipathy to the people of the United States, early recognized the Confederacy, and her course was followed by France and Spain, but the latter powers did not resort to the extreme measures of England.
45
During the early period of the war, immense sums of money were needed by the Federal Government to arm, equip, and maintain her numerous armies and fleets necessary for the suppression of the rebellion.
Heavy taxes of various kinds were levied and collected for the payment of the extraordinary expenses incurred by the war, but this was insufficient to meet the expenditures. Resort was had to borrowing money on the credit of the United States by the sale of bonds.
At that time as at present, New York City was the financial center of the country. August Belmont & Co. were the American agents of the Rothchilds, and the former advised this great banking house that there would be much risk in purchasing American bonds.
The Rothchilds were located in the city of London, England, with branch banks at Paris, Frankfort, Berlin, and Vienna.
>From the year 1800, up to the outbreak of the civil war, the United States had made astonishing progress as a commercial nation, our commerce had rapidly grown to bc the second largest in the world, and it promised, ere long, to surpass that of Great Britain, who had long looked with jealous eye on the remarkable growth of the American merchant marine. She had for centuries prided herself as the "Mistress of the Seas," and had long feared that this republic would snatch its supremacy from her, and thus relegate her to a second rate power.
Hence, upon the outbreak of the war, the rejoicing in England was immense, and British statesmen predicted the success of the Confederacy. Nor was this
46
all. England aided the South by money, munitions of war, by the recognition of her belligerency, and by her moral support.
It was evident that no money could be secured from England by the United States to maintain the supremacy of the Constitution, for nations, like men, are governed in their money transactions largely by their likes and dislikes.
In 1861, the money in circulation in the United States consisted of gold and silver coins, and state bank currency. As the expenses of the Government in 1861-62 were many millions of dollars in excess of its income, and as but little money could be had by the sale of its bonds, recourse was had to issuing paper money.
By the acts of July myth, and August g, 1861, the Secretary of the Treasury was authorized to issue demand notes to the amount of fifty millions of dollars, and these notes were made full legal tender for all debts and demands, both public and private. This was net the first time that the Federal Government had issued its notes to circulate as money. It will be remembered that during the war of 1812, the Government had resorted to this means, a precedent followed by the administrations of Van Buren, Polk, and Buchanan.
These notes so issued at these various times were maintained at a parity with gold and silver coin, and were a favorite money of the people. History records the fact that no less than twenty issues of paper money were emitted by the general Government prior to the year 1862; that the people never questioned its value and efficiency as a medium of exchange. These various issues of currency were uniformly receivable
47
by the government in payment of its taxes and revenues.
During the perilous times of the nation, when bankers and financiers refused to loan money to it, the issue of full legal tender paper money never failed to come to the rescue, while cowardly gold fled to the rear.
Therefore, the fifty millions of demand notes issued under the authority of the acts of July 17th and August 5, 1861, having unlimited legal tender power for the payment of all demands, never depreciated a farthing.
Subsequent to the passage of this act, a bi11 was introduced in Congress providing for the issue of non-interest bearing treasury notes to the amount of $150,000,000 with full legal tender power for the payment of all debts and demands, public and private. Immediately, from the leading cities of the country, a horde of bankers, or as Hon. Thaddeus Stevens aptly termed them, "A delegation of bankers and coin venders," hastened to Washington, organized themselves, and requested the Committee on Ways and Means of the House, and the Finance Committee of the Senate to meet with them at the office of the Secretary of the Treasury. Their request was complied with on the 11th day of February, 1862.
Owing to some peculiar and powerful influence, then and there exerted by these organized bankers on these committees, the legal tender clause was modified to read as follows: -
"That the amount of the two kinds of notes together shall at no time exceed the sum of $150,000,000, and such notes herein authorized shall bc receivable in payment of taxes, internal duties, excises, debts, and demand of every kind due to the United States, except duties on imports, and of all claims and demands
48
against the United States of every kind whatsoever, except for interest upon bonds and notes which shall bc paid in coin, and shall also be lawful money and a legal tender in the payment of all debts, public and private, within the United States, except duties on imports and interest as aforesaid."
This proposed amendment was severely criticized by Mr. Stevens, of Pennsylvania, and by Mr. Spaulding, of Net York. During the debate upon the bill as amended, her. Stevens denounced the demands of the bankers and said: -
"A dolefu1 sound came up from the caverns of the bullion brokers and the saloons of the associated banks. Their cashiers and agents were soon on the ground, and persuaded the Senate with but little deliberation to mangle and destroy what it had cost the House months to digest, consider and pass.
"Instead of being a beneficent and invigorating measure, it is now positively mischievous. It has all the bad qualities which. its enemies charged on the original bill and none of its benefits. It now creates money and by its very terms declares it a depreciated currency. It makes two classes of money - one for banks and brokers and another for the people. It discriminates between the rights of different classes of creditors; allowing the rich capitalist to demand gold and compelling the ordinary lender of money on individual security to receive notes which the Government had purposely discredited."
Mr. Stevens further said: -
"Who is this favored classy The bankers and brokers and nobody else. But how is this gold to be raised? The duties and public lands are to be paid for in United States notes, and they or bonds are to be put up at auction, to get coin for these very brokers, who would furnish the coin to pay themselves by getting twenty per cent. discount on the notes thus bought."
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While on his death bed, the Great Commoner, as his friends loved to call him, recalled the action of Congress in demonetizing the greenback at the instigation of the banks. In
speaking of the bankers he said: -
"We were foolish to grant them gold interest, and now they unblushingly demand further advantages. The truth is we can never satisfy their appetite for money."
The amendment of Mr. Stevens to place officers and soldiers of the army and navy, and those who should furnish them with provisions upon the same standing as the bankers and brokers, was defeated by a vote of 72 to 67.
In denouncing the amendment striking out the legal tender clause, Senator John Sherman spoke as follows; -
"If you strike out this legal tender clause you do it with the knowledge that these notes will fall dead upon the money market of the world; that they will be refused by the banks; that they will bc a disgraced currency that will not pass from hand to hand; that they will have no legal sanction; that any man may decline to receive them, and thus discredit the obligations of the Government. I ask again if that is just to the men to whom you have contracted to pay debts? When yon issue demand notes and announce your purpose not to pay any more gold and silver coin, you tender to these who have furnished provisions and services this paper money. What can they do? They can not pay their debts with it, they can not support their families with it, without a depreciation."
He further said in this speech of February 13, 1862, that "I much prefer the credit of the United States, based as it is upon all the productions and property of
50 the United States, to the issues of any corporation, however guarded and managed."
This language of Senator Sherman was that of undoubted patriotism, and it is strongly condemnatory of his subsequent public career, during which he became the active ally of the national banks.
Mr. Kellogg, of Illinois, thus scored the greed of these men. He said: -
"I am pained to sit in my place in the House and hear members talk about 'the sacredness of capital, that the interests of money must not be touched. Yes, sir, they will vote six hundred thousand of the flower of the American youth for the army to bc sacrificed without a blush, but the great interests of capital, of currency, must not be touched. "
In referring to the grand struggle made by Mr. Stevens for full legal tender currency, Judge Kelley said: -
"I remember the grand old Commoner with his hat in his hand and his cane under his arm, when he returned to the House from the final conference, shedding bitter tears over the result. 'Yes,' said he, 'wc have had to yield. The Senate was stubborn. Wc did not yield until we found that the country must bc lost or the banks bc gratified; and wc have sought to save the country in spite of the cupidity of its wealthiest citizens.' "
The bankers thus succeeded in limiting the legal tender power of the Treasury note, or as it is commonly called, the greenback, and from this time on the bankers, brokers, and speculators have, with few exceptions, dictated the financial legislation in the United States.
This amendment, by which the debt paying power of the Treasury note was restricted within such narrow limits, was a most dishonest act on the part of the government.
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It drew distinctions between the various kinds of money issued by the United States. It made the bankers and bond holders a privileged class, and it inflicted a wound upon the nation from which it has not yet recovered. It made gold and silver coin the money of the privileged classes, who composed that traitorous element so justly denounced by Jefferson.
By force of this amendment, coin went to a premium, thereby greatly enhancing the wealth of the bankers and bullion brokers.
Moreover, the principle involved in that act greatly weakened the most powerful element of sovereignty that can reside in a nation, by placing the control of the value of money in the hands of organized greed, in this case the gold gamblers of Wall street.
It laid the foundation of a stupendous public debt, which the holders thereof would strive to perpetuate by every means in their power, and it was the first step to fasten on the people the most powerful and merciless tyranny that ever cursed a free people - the centralized money power known as the national banking system.
The bill, as amended, became a law on July 11, 1862, and, from that time, began the depreciation of the greenback currency.
The banking power, which had succeeded in inducing Congress and the President to cripple that currency, which eventually saved the Union, afterward pointed the finger of scorn at this money as a debased currency, and they, therefore, impliedly damned their own nefarious conduct by denouncing it as "rag-baby" money.
As a result of this act as amended, the merchant who
52
paid duties on merchandise imported from abroad was compelled to pay the taxes levied thereon, in coin. To obtain that kigid of money he must proceed to the bullion broker, and pay him a large premium for the coin to mate his payment of the customs levied on his merchandise. The bond holder was paid his interest on government bonds in gold, which was afterward sold by him to the importer, at a high premium.
This legislation was the result toward which the bullion brokers and gold gamblers of Wall street bent all their energies to procure, when they induced the government to rob the greenback of its full legal tender debt-paying power. It was the consummation of the most dishonest financial scheme ever perpetrated upon a heavily taxed and patriotic people.
Immediately following the visit of these bankers to Washington, a circular was issued by the London bankers, and distributed by one Hazard, who was their representative in this country at that time.
The contents of this famous circular are as follows: -
"Slavery is likely to be abolished by the war power and chattel slavery destroyed. This I and my European friends are in favor of; for slavery is but the owning of labor and carries with it the care of the laborer, while the European plan, led on by England, is capital control of labor by controlling wages. This can bc done by controlling the money. The debt, that capitalists will see is to be made out of the war, most be used as a measure to control the volume of money. To accomplish this the bonds must be used as a banking basis. We are now waiting for the Secretary of the Treasury to make his recommendation to Congress. It wil1 not do to allow the greenback (as it is called) to circulate as money any length of time, for we cannot control it."
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The existence of this remarkable circular has been strenuously denied time and again by the national banking money power. Notwithstanding these denials, the line of action indicated in that circular has been consistently pursued from that day to this.
The advice of said Hazard was at once acted upon by the organized banks, and they proceeded to mate known their demands to Congress.
Therefore, a bill was speedily brought forward by Senator Sherman in the United States Senate, providing for the incorporation and organization of the present system of national banks as banks of issue - a bill whose passage meant the creation of moneyed institutions, whose interests would bc, or could be made, antagonistic to the nation.
Is it not exceedingly strange, that Senator Sherman, who, in his able speech of February 13, 1862, advanced powerful arguments in behalf of Government legal tender currency, or greenbacks, in which he stated that he preferred the credit of the United States, based, as it was, upon all the productions and property of the people, to the issue of any corporation however well guarded and managed, would thus suddenly change his position?
In less than a year from the time he so ably defended legal tender greenback currency, he reversed his position, and fathered a, financial measure which brought into being a dangerous rival to the Government when it was engaged in a death struggle.
In substance, this act provided for the incorporation of banking companies, by which not less than five persons could, under certain restrictions, organize a bank, by depositing with the Secretary of the Treasury
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United States bonds to secure the circulation of national bank notes as currency.
The capitalists thus organizing themselves into a national bank association, were required to enter into articles of association which should specify, in general terms, the object for which the association was formed.
These articles were to be signed by the persons uniting to form the association, and a copy of them was to be forwarded to the Comptroller of the Currency to be filed and preserved in his office.
No association could bc organized as a national bank with a less capital than one hundred thousand dollars; except that banks with a capital of not less than fifty thousand dollars could, with the approval of the Secretary of the Treasury, bc organized in any place having a population not exceeding six thousand inhabitants.
Upon a deposit of United States bonds, the banking associations were entitled to receive from the Comptroller of the Currency, circulating notes, of different denominations, in blank,
registered or countersigned, equal in amount to ninety per centum of the amount of the current market value of the bonds so deposited by the association with the Comptroller, but in any case the circulating notes were not to exceed ninety per centum of the par value of the said bonds, if bearing interest at a rate of not less than five per cent per annum; and the amount of circulating notes to be furnished to each association shall be in proportion to its paid-up capital as follows, and no more: -
To each association whose capital does not exceed five hundred thousand dollars, ninety per centum of such capital.
To each association whose capital exceeds five
55
hundred thousand, but not exceed one million of dollars, eighty per centum of such capital.
To each association whose capital exceeds one million of dollars, but not exceed three millions of dollars, seventy-five per centum of such capital.
To each association whose capital exceeds three millions of dollars, sixty per centum of such capital.
The law further provided that after any association receiving circulating notes under this act, and has caused its promise to pay such notes on demand to be signed by the president, or vice-president, and cashier thereof in such manner as to make them obligatory promissory notes payable on demand, at its place of business, such association may issue and circulate the same as money. And such notes shall bc received at par in all parts of the United States in payment of taxes, excises, public lands, and all other dues to the United States, except duties on imports, and also for all salaries and other debts and demands owing by the United States to individuals, corporations, and associations within the United States, except interest on the public debt, and in redemption of the national currency.
This act also provided that, in lieu of all existing taxes, each association should pay a duty of one per cent per annum upon the average amount of its notes in circulation, and one-half of one per cent per annum upon the average amount of its deposits, and a duty of one-half of one per cent per annum on the average amount of its capital stock beyond the amount invested in United States bonds.
Furthermore, these national banking associations were authorized to institute suits at law in the United States courts as courts of original jurisdiction.
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This provision gave the national banks an advantage over the ordinary citizen, and placed these associations beyond the jurisdiction of the State courts; in other words, these banks could select whatever court their interest dictated.
It will at once be ascertained, from a study of the national banking law, that the capital of the associations was nearly doubled by act of Congress.
In the first place, bonds, deposited by them to secure their circulation drew interest payable in gold, at this time at a high premium. Second, the circulating notes issued to them by the United States, although promissory notes payable on demand and therefore debts of the banks, were nominally money, and were loaned out at a high rate of interest to the customers of the national banks.
The United States Government gave the wealthiest men of the country, in the time of its greatest peril and distress, a gratuity equal to ninety per centum of their banking capital.
This scheme engineered through Congress by the money power, greatly tended to centralize the currency in the large cities, and, therefore, made it master of the productive energies of the American people, as the vast majority of the bonds were held in New York City and other centers of wealth and population.
It made the circulating notes of these banks a rival to the greenback currency, and it would bc to the interest of the national bankers, by every means in their power, to drive out and destroy the paper money issued by the Government.
This law placed it in the hands of the money power to contract or expand the volume of money at its pleasure,
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and, therefore, enhance or depreciate the value of stocks, bonds, and all other forms of property in the United States.
The far-reaching influence of this act of Congress, chartering national banks, becomes apparent, when the true principles and functions of Government are considered in all their relations to the people.
Pre-eminent among the various powers conferred upon, or assumed by a sovereign state, are those of taxation, of raising armies, and of coining, issuing, and controlling the volume of money.
The first named power, that of taxation, is only limited by the necessities of the State, and of the amount of property upon which it operates.
A citizen of a state may become the owner of a home through arduous toil and life-long rigid economy, yet, the state, when invoking the power of levying and collecting taxes, may sweep away this property, not leaving a vestige for the man whose labor and privations created a shelter for himself and family.
In a great case before the highest tribunal of the nation, Justice Samuel P, Miller said that "The power of taxation is the power to destroy."
No man who is endowed with a modicum of intelligence would advocate a transfer of this immense power to a private corporation for its gain.
It would amount to the self-destruction of a nation.
The power of raising and maintaining armies is inherent in a sovereign state, and is absolutely necessary for its self-defense, and therefore its self-preservation.
The strong arm of the Govcrnment can reach every fireside in the land, and can drag from thence the father, husband, or son, tear him away from the family
58
circle, force him to don the national uniform, to bear arms, and to lay down his life for his country.
No citizen can resist the imperative call of his country when involved in war.
No sane man would advocate the delegation of this high attribute of sovereignty to a corporation for its individual gain, as such transfer of power would inevitably result in frightful oppression.
The power of coining, issuing, and controlling the volume of money is a far more important function of government than the foregoing.
All commerce, exchange, the existence of Government, of civilization itself, hinges upon this mighty function of Government. The power of issuing and controlling money exercises an imperial sway over all productive industry as universal as the law of gravitation upon all matter.
The value of all property, whether of the present time, or of that resulting from the earnings and accumulations of all past generations, depends upon the control of the volume of money,
The power of levying and collecting taxes for the support of the nation, of raising and maintaining armies for its preservation, is dependent upon the control of the currency.
The former is subordinate to the last named power, and consequently involves the very life of the nation.
Yet, in time of the greatest need of the nation, when everything most valuable to man was at stake, this necessary power of Government was delegated to the most traitorous and rapacious system of corporations that ever cursed the people.
By this transfer of sovereign power to the national
59
banking system, the Federal Government divested itself of that never failing resource which secured the independence of the colonies, and which successfully enabled the administration of James Madison to chastise the overweening pride of Great Britain in 1812.
The alienation of this highest function of the nation to the national banking money power was a high crime against the welfare of the country, and it created a powerful moneyed interest antagonistic to the United States.
More than one hundred years ago, the illustrious Jefferson clearly pointed out the dangers of banks of issue. Time and again, he exerted his voice, his pen, and his influence, in warning the people of the consequences that would inevitably flow from such selfish schemes as the transfer of national powers to corporations.
The extreme danger of a sovereign power, in transferring its absolute right of coining and issuing money in whole, or in part, to a private individual, or corporation, has been clearly pointed out by the ablest thinkers of a11 ages. Such transfers of the powers of a state have universally resulted in extortion and oppression by those to whom this privilege is granted.
Vattel, the great authority on the law of nations, instances several cases. He places the right of coining money among the prerogatives of majesty, and he relates that Sigismund, king of Poland, having granted this privilege to his vassal, the Duke of Prussia, in the year 1543, the Estates of that country passed a decree in which it was asserted that the king could not grant that privilege, it being inseparable from the crown.
The kings of France granted the privileges of coin
6o
ing money to lords and bishops, and these grantees .having used that power as an instrument of great oppression, these privileges were cancelled by the crown on account of the great abuses practiced on its subjects.
The history of England furnishes a notable example, for in 1723, one Wood, an Englishman, obtained a royal patent for the coinage of copper half-pence. Wood at once proceeded to flood Ireland with this base coin, and robbed the down-trodden people of that country out of thousands of pounds sterling.
This gross outrage upon that nation aroused the indignation of Swift, and in his "Drapier's Letters" he attacked the Government with such bitter satire, that, in 1725, the patent to Wood was withdrawn.
Parliament, however, granted the scoundrelly Wood an annuity of fifteen thousand dollars per annum for the period of twelve years as an indemnity! The presumption is, that this great sum of money was given to Wood on the ground that he had surrendered a "vested right."
Our Government, in the enactment of this national banking law, gave away its greatest resource in time of peace or war; viz., the power to issue legal tender paper money, a resource that had time and again come to the rescue of the people while the capitalists held aloof.
The principal excuse offered by those who procured the passage of this law was, that it would create a market for bonds, and would aid in the maintainance of the public credit; that, for the consideration of receiving these circulating notes to loan out at interest as money, the bankers, who werc the beneficiaries of this law, would lend their assistance to the Government by aiding it to maintain a high price for its obligations.
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The very reason advanced by the originators of that system of banking and currency for its creation, became the strongest reason why the Government credit sunk to its lowest point, because, the national bankers, to obtain these bonds as low as possible, would combine to depress the market value of the United States bonds which formed the basis of bank currency.
In fact, the market price of Government bonds rapidly fell to the lowest mark ever known, after the passage of this act, and the national banking money power consequently reaped a harvest reaching into scores of millions.
The same power depreciated the value of greenbacks for the avowed purpose of increasing the premium on gold.
Not satisfied with the immense advantages thus obtained from the Government, during the most critical period of the war, the money power, on the 17th day of March, 1864, succeeded in securing the passage of a resolution through Congress, authorizing the Secretary of the Treasury to pay the interest upon bonds, in advance, not exceeding one year, either with or without rebate for such prepayment, according to his discretion.
The bond holders and bankers were thus enabled to draw their interest in gold one year in advance, dispose of it at a high premium to the government and to those who paid duties on imported merchandise.
In July, 1864, gold rose to a premium of $2.85, and the bond holder, national banker, and gold gamblers fleeced the people out of millions; while the soldier, who was sacrificing his life for his country, was paid in greenbacks purposely depreciated by the government for whose existence he fought.
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During the Forty-fifth Congress, Hon. James R. Weaver introduced the following resolution in the House of Representatives: -
"Resolved, That the Secretary of the Treasury bc and is hereby directed to report to this house whether he has at any time anticipated the payment of interest on the public debt; if so, how much has been paid in advance, and to whom."
This resolution was referred to the Committee on Ways and Means, and the chairman thereof sent the resolution to the Secretary of the Treasury, Sherman, with a request to state when he could report.
The Secretary, in reply, stated: -
"That there was no public document that would give the information required. The department has been in the habit for five years of paying the interest in advance without charging anything."
This remarkable admission will attract attention for the reason, that the head of the Treasury Department distinctly states that interest had been paid in advance to the bond holders and bankers without any deduction for the use of the money, and that there was no public document that would give the information required. The obvious reason why there were no public documents in the treasury department, containing a record of the interest on bonds paid in advance was this, that it would show a gigantic robbery of the government by the banks and bond holders, and that it would awaken the just wrath of the people at the subservience of congress to the demands of the gold gambling money power.
In a speech delivered by Senator Sherman in advocacy of the national banking law, he said: -
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"We are about to choose between a permanent system, designed to establish a uniform national currency, based upon the public credit, limited in amount, and guarded by all the restrictions which the experience of man has proved accessary and a system of paper money without limit as to amount, except for the growing necessities of war."
In this declaration of the senator, he expressly admits that the circulating notes of these banks were based on the credit of the Government.
The truth is, that no safe system of bank currency has ever yet been devised by the wit of man, but that its credit is based upon that of the Government, and the credit of a government rests upon its taxing power, which is its means of self-preservation.
To give an excuse for his change of front from an advocate of a legal tender Government currency, to a champion of the national banking system, the senator uses the following language: -
"It is asked, why look at all to the interests of the banks; why not directly issue the notes of the Government, and thus save the people the interest on the debt represented by the circulation? The only answer to this question is that history teaches us that the public faith of the nation alone is not sufficient to maintain a paper currency. There must be a combination between the interests of individuals and the Government."
This astonishing declaration of Senator Sherman is proven absolutely false by the provisions of his own act, the national banking law, which makes United States bonds the sole security for national bank notes, and compels the Government to act as a redemption agency for the notes of insolvent banks.
As the next step to secure the perpetuation of this robbery of the people, Congress, on the 3rd of March,
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1863, authorized the Secretary of the Treasury to issue $900,000,000 in bonds, drawing interest at six per cent., and redeemable in not less than ten nor more than forty years. These bonds could be purchased by lawful money, thereby meaning United States notes and treasury notes.
There was a lapse of six days between the passage of the national banking act and the passage of this act authorizing said bond issue.
There was yet one rival in the field which the national banks desired to crush, and this was the state banks of issue, which, at this time, had a circulation of $238,677,218in state bank currency.
To destroy the state banks as banks of issue, and to drive out of circulation that species of paper money, the national banking money power prevailed upon congress to call into requisition the taxing power of the nation to clear the field of these competitors.
In compliance with their demands, Congress enacted the following law, viz; -
"That every national banking association, state bank, or state banking association, shall pay a tax of ten per centum on the amount of notes of any person, or of any state bank or state banking association used for circulation and paid by them." -
This great tax thus imposed by Congress upon the issues of state bank currency was effectual in successfully accomplishing its purpose.
The state banks, therefore, were driven to the necessity of organizing themselves into national banks, and this tended to a further consolidation of the money lending interests of the country.
During the early part of the year 1864, after the
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organized banks had secured the passage of the law depriving greenbacks of their legal tender power, and after the passage of the national banking law, one James Buell, secretary of the New York bankers' committee, issued the following circular to the bankers of the country at large: -
"Dear Sir: It is advisable to do all in your power to sustain such daily and prominent weekly newspapers, especially the agricultural and religious press, as will oppose the issuing of greenback money, and that you withold patronage and favor from all applicants who are not willing to oppose the Government issue of money. let the Government issue the coin and the banks issue the paper money of the country, for we can better protect each other. To repeal the law creating national banks or to restore to circulation the Government issue of money will bc to provide the people with money, and will therefore seriously affect your individual profit as banker or lender. See your member of Congress at once and engage him to support our interest that wc may control legislation."
The appearance of this infamous circular stirred up the wrath of the people, and a wave of indignation swept over the land, The nefarious schemes of the money power werc set out in this circular with startling distinctness.
The bankers of the country were urged to combine their power; the press of the country was to be corrupted, and legislation was to bc controlled, to effect the purpose of transferring the control of the money of the country to the dictation of the money power.
The associated banks of New York City, in order to conciliate the people who werc strongly denouncing the scheme set forth in the circular of Buell, announced that this document was issued without their knowledge
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or authority. However, Mr. Buell, whose name was appended to this circular, was rewarded by an election to the presidency of the Importers' and Trailers' National bank, of New York City, a position which has given him much power and prestige as one of the money kings of Wall street.
The evidence is positive that this circu1ar was issued with the approval, and by the orders of the associated banks of New York City. In the first place, the advice tendered to the various banks of the country was in complete harmony with the intentions of the money power, and secondly, the national banks, from that day to this, have carried into execution the baleful plan outlined in that document, as the various acts of congress and subsequent history abundantly prove. It was during the corrupt period of the war that immense grants of public lands were made to railway corporations, that donations of United States bonds, amounting to nearly one hundred million of dollars were made to the Pacific railway companies, and this was done during a time whcn the government was in need of funds to suppress the rebellion.
It was during this period that Congress passed the notorious foreign contract labor law, through the operation of which, the mills, factories and mines of the United States werc flooded with the Slavs, Huns, Bohemians, Poles, and various other nationalities of Europe, thereby laying the foundation for the countless race and labor riots, that have disgraced and cursed the manufacturing and mining states of the Union.
After the suppression of the state banks of issue, the next step of the national bank was directed toward
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the destruction of the greenbacks and United States notes, and, therefore, on the 12th of April, 1866, an act of Congress was duly signed by the President providing for the withdrawal and cancellation of the United States notes and treasury notes.
This act provided that, within six months after the passage thereof, the Secretary of the Treasury was authorized to retire from circulation United States notes to the amount of ten million dollars, and for every month thereafter a sum not to exceed four million dollars.
At, the time of the passage of the act of April 12, 1866, Hon. Hugh McCulloch, a national banker, and a bitter opponent of the legal tender currency, was Secretary of the Treasury. He had gone so far in his opposition to the United States notes and treasury notes as to denounce them as "disreputable, dishonorable money."
Secretary McCulloch immediately proceeded to remorselessly contract the volume of legal tender notes, until $94,000,000 of them were withdrawn from circulation by the issue of interest bearing bonds in exchange therefor.
On the ad of March, 1867, an act was adopted by Congress providing for the redemption and retirement of the compound interest notes, which, at this time were outstanding to the amount of $159,000,000 and which circulated as money.
The method of redemption was the substitution of temporary loan certificates in lieu of these notes. The amount of such certificates was fixed at $50,000,000, and they bore interest at the rate of three per cent per annum, and national banks were authorized to count
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such certificates as part of the Reserve Fund provided in the national banking law.
On July 25, 1868, the Secretary of the Treasury was authorized to issue additional loan certificates to the amount of $25,000,000.
The acts of March 2,1867, and July 25, 1868, made a further contraction of money to the amount of $75,000,000.
It will be seen, therefore, that the scheme set forth in the circular of James Buell was being carried out to the letter.
Step by step, the national banking money power was gradually succeeding in driving the legal tender currency oat of circulation, in perpetuating the public debt by the issue of long time bonds, and usurping the functions of government by the issue of bank notes.
On the 18th of Match, 1869, a bi11 entitled, "An Act to Strengthen the Public Credit," was signed by President Grant.
The provisions of the Credit Strengthening Act declared that the public faith is solemnly pledged to the payment of the interest and non-interest bearing obligations of the government in coin or its equivalent, except where the law authorizing the issue of such obligations has expressly provided that the same may be paid in lawfu1 money, or other currency than gold and silver. Furthermore, the United States solemnly pledged its faith to make provisions at the earliest practical period for the redemption of the United States notes in coin.
This so-ca11ed Credit Strengthening Act, by force of its provisions, made every dollar of the bonded debt of the United States payable in gold and silver coin. It
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was estimated by the ablest public men of the day that this rascally piece of legislation added six hundred million dollars to the wealth of the national banks and bond holders.
Let it be remembered that this bonded debt was purchased, to a very large extent, with treasury notes purposely depreciated by act of Congress, and that a very large portion of these bonds ware bought with greenbacks when the latter were worth but forty cents on the dollar in gold.
It should further be borne in mind, that for more than three years prior to the passage of this act, peace had be in restored, the Federal authority was re-established over the South, slavery, the cause of the war, was abolished, the treasury notes and United States notes were appreciating in value every day since the establishment of peace, which, it was admitted, were continually adding wealth to the holders of United States bonds, therefore, those members of Congress who voted for that measure could not even urge necessity - the last plea of tyrants - as an excuse for voting hundreds of millions of dollars to the least patriotic of American citizens.
Owing to the enormous revenues collected by the Federal Government, the public debt was being rapidly paid, which exceedingly alarmed the national banking money power, who desired the perpetuation of the bonded debt of the United States, for without bonds, there would be no national banks.
Therefore, the national banks sought by every means in their power to secure the perpetuation of the national debt, and this result could be obtained in two ways, first - by n heavy reduction of the public rev-
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enues; second - by funding the present debt into long time bonds.
During the war heavy duties were laid upon imported goods, taxes were levied on incomes, railway companies, insurance companies, manufacturers, and excises were collected on tobacco and spiritous liquors.
The manufacturing interests of the country were protected from the competition of foreign goods, wares, and merchandise by a very high tariff, while at the same time they were enabled, under the provisions of the foreign contract labor law of July 4, 1864, to import cheap labor by the wholesale from China, Germany, Belgium, Italy, Russia, Austria, and other foreign nations, It was a matter of prime interest to the manufacturers to maintain the present high rate of duties on imports, and at the same time secure the removal of the taxes on incomes, manufactures, and various other forms of internal revenue. Moreover, the manufacturers desired the perpetuation of a huge public debt which would necessitate the raising of large revenues to meet the interest charged thereon. Furthermore, it would be to the interest of the national banks and manufacturers that Congress should make extravagant appropriations for the support of the Government.
The subsequent action of these two interests taken in connection with the legislation procured by them from congress, abundantly prove that the foregoing statements are true.
Hon. William D. Kelley, member of Congress from Pennsylvania, was the outspoken advocate of the manufacturing interests on the floor of the house. In 1867, he offered the following resolution; -
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"Resolved, That the Committee on Ways and Means be instructed to inquire into the expediency of immediately repealing the provisions of the internal revenue law, whereby a tax of five per cent. is imposed on the mechanical and manufacturing interests of the country."
The resolution was unanimously adopted.
At the same time, Jay Cooke, the head of a great banking firm in Philadelphia, was the agent of the United States Treasury, and as such agent had negotiated the sale of government bonds in England and America to the amount of several hundred million dollars, and he, therefore, assumed the position of spokesman for the national banking interests.
As early as 1867, Mr. Cooke declared that the income tax should "Be scornfully abandoned and that right speedily. "
He laid down the following monstrous principle: -
"We lay down the proposition that our national debt, made permanent and rightfully managed, will be a national blessing.
"The funded debt of the United States is the addition of $3,000,000,000 to the previously realized wealth of the nation. It is three thousand millions added to the available active capital. To pay this debt would be to extinguish this capital and lose this wealth. To extinguish this capital and lose this wealth would be an inconceivably great national misfortune."
We can easily conceive why Jay Cooke, the alleged great financier, should give utterance to such an absurd statement. Mr. Cooke is an interested witness in the support of the ridiculous maxim "That a public debt is a public blessing." He was realizing millions in the way of commissions by negotiating the sale of bonds.
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To attract the support of the manufacturers, he says: -
"The maintenance of our national debt is protection. The destruction of it by payment is bondage again to the manufacturers of Europe."
In his appeal to the national banking money power, he says: -
"That is not a hazardous opinion which declares that in less than twenty years our national bank circulation will be $1,000,000,000. The currency that sixty-one millions of people, unequaled in industry and untrammeled in enterprise, will require, has got to have the basis of a national debt. There is no other foundation for it to stand on that will impart to it at once safety and nationality."
It wi11 be well to state here, that the man who gave utterance to these vicious propositions was overtaken with calamity, and the gigantic failure of his banking house heralded the great panic of 1873.
The national banks at once joined hands with the manufacturing interests, and brought their combined influence to bear upon congress.
On the first day of the session of Congress in 1867, Representative Kelley, known as "Pig Iron" Kelley, introduced the following resolution in the House: -
"Resolved, That the war debt of the country should be extinguished by the generation that contracted it, is not sustained by sound principles of national economy, and does not meet the approval of this house. "
This resolution was adopted,
As a result of the combined influence of the national banking money power and the manufacturing interests, congress eventually repealed the tax on incomes, manufactures, railroads, insurance companies, and the tax on perfumes, bank checks, and reduced the excise tax on whisky and tobacco.
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In all, the total taxation remitted by the general government, at the behest of the sordid wealth of the country, amounted to $227,000,000 per annum.
Such was the process by which ill-gotten accumulated wealth escaped taxation. The national banking money power was not yet satisfied; its greed was insatiate; the more it received frown the hands of the government the more ravenous its demands; and on the 14th of July, 1870, it procured the passage of the Funding Act through a venal and corrupt congress.
This act was supplementary to the Credit Strengthening Act of March 18, 1869, and it went one step farther by providing that the 5-20 bonds should be payable in coin. It authorized the Secretary of the Treasury to issue bonds to the amount of $200,000,000 in denominations of' fifty dollars, or some multiple of that sum, redeemable in coin of the present standard value, at the pleasure of the United States, after ten years from the date of their issue, and bearing interest at the rate of five per cent per annum, payable semi-annually in coin; also a sum not exceeding $300,000,000 of like bonds, the same in all respects, but payable at the pleasure of the United States, after fifteen years from their issue, and bearing interest at the rate of four and one-half per cent. per annum; he was further authorized to issue bonds to the amount of $1,000,000,000, the same in all respects as the others, but payable at the pleasure of the United States after thirty years from the date of their issue, and bearing interest at the rate of four par cent. per annum.
We quote from a portion of the law as follows: -
"A11 of which said several classes of bonds and the interest thereon shall be exempt from the payment of
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all taxes or duties of the United States, as well as from taxation in any form by or under state, municipal or local authority; and the said bonds shall set forth and express upon their face the above specified conditions, and shall, with their coupons, be made payable at the treasury of the United States."
The Secretary of the Treasury was authorized. to sell these several classes of bonds, at not less than par, for coin, and to redeem the 5-20 bonds, hitherto exempted from payment in coin by the Credit Strengthening Act; or he was authorized to exchange the 5-20 currency bonds, at their face value for the coin bonds provided for by the Funding Act of July 14, 1870.
To exhibit the powerful influence exerted upon that congress which passed the Funding act of July 14, 1870, we will refer to a few facts that have become history.
When the Funding bill was originally introduced, section eight provided that on and after the 1st day of October, 1870, national banks should deposit registered bonds of any denomination not less than one thousand dollars, issued under the provisions of this Funding act, and no other, with the Treasurcr of the United States as security for notes issued to national banking associations for circulation under the act of June 3, i 864. The banks were given one year in which to take advantage of this section to deposit the new bonds in lieu of the former, as security for their circulating notes. In case of failure to obey this act, their right to issue notes was forfeited.
On their failure to deposit bonds issued under the act of July 14, 1870, in lieu of the bonds then on deposit as security for their circulation, the Treasurer and the Comptroller of the Currency were authorized to call in
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and destroy their outstanding circulating notes, and to return the bonds held as security therefor to the association by whom they were deposited.
The bill containing this section originated in the senate, and after it passed that body and came up in the house for consideration, the national bankers swarmed in the halls of Congress and demanded that this section be stricken out.
At no one time during the history of the national banks did their combined power appear so formidable.
The house quailed in the presence of these money kings, and the section was stricken out, and the bill thus amended was sent back to the senate.
The demands and methods of the banks in seeking the defeat of this section had become so insolent that even Senator Sherman rebelled.
He said in reply to their imperious demands: -
"Mr. President, the three remaining sections of this bill apply to the national banks. That is much too great a theme for me to enter upon at this stage of the debate; but I will explain in a very few words the ' theory of those sections. The national banks are mere creatures of law. They hold their existence at the pleasure of Congress. Wc may, to-morrow, if it promotes the public interests, withdraw their authority. The franchise has been valuable to them.
"We think it right they should aid us in funding the public debt. They hold of our securities $346,000,-000. Nearly all of these bear six per cent interest in coin. We will not deprive them of any of them; we will not take from them the property they enjoy; we wi11 not deny them even the payment of six per cent gold interest as long as they are the owners of these bonds. But they hold the franchise of issuing paper money guaranteed by the United States, and which Constitutes the circulation of our country; and we say
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to twenty per cent. annually upon the franchise. But, sir, the vote of the House shows the power of the national banks."
The Senate gave way to the banks, and these monopolies compelled Congress to submit to, their will.
It would be presumed that Senator Sherman, judging from the vigor of his speech against these monopolies on this occasion, would subsequently oppose their future demands. Not so, however. He became a more devoted servant than ever in furthering the ambition of the national banking money power to monopolize the issue of paper money.
By an amendatory act of January 20, 1871, the secretary of the Treasury was authorized to increase the issue of five per cent bonds, for which provision was made by the Funding Act, from $200,000,000,to $500,-000,000, making a total interest charge upon the $1,500,000,000 of bonds so authorized to be issued, of $62,500,000,per annum.
The outrageous legislation embodied in this Funding Act becomes apparent to the reader.
In the first place, the 5-20 bonds, to the amount of $722,205,500, purchased with treasury notes, purposely depreciated by the Government at the demand of the gold gamblers of Wall Street, were made redeemable in coin.
This resulted in a gratuity of many millions of dollars to the holders of these bonds, which was nothing more nor less than robbery under form of law.
Second, it created a vast debt, making an annual charge upon the industries of the people of $6,500,000 all of which, both principal and interest, was exempt from taxation, national, state, county, and municipal,
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creating a special privileged class who could not be compelled to contribute a farthing toward the expenses of that Government which gave them protection.
Not only were these bond holders expressly exempted from taxes, but these non-taxable bonds opened a wide door for extensive frauds upon the revenues of state and municipal authorities.
The process by which states, cities, counties, town-ships, and school districts were swindled out of taxes and revenues was by the shifting of the ownership, nominally at least, of these bonds around the various banks and capitalists who returned them as non-taxable.
For instance, banks and capitalists, when the time came for them to return their assessments of personal property, would report large holdings of these nontaxable bonds, which were obtained for the occasion, and since 1870, this resulted in swindling the various local governments out of countless millions of dollars in taxes.
The same process by which non-taxable greenbacks were shifted from hand to hand, to avoid the payment of taxes during the period required by law for the return of assessment lists for taxation, was adopted on a larger scale in the case of these non-taxable bonds. It set a premium on perjury.
As these bonds were held to a very large extent in the great cities of the country where taxation is very high, in some cases equalling four per cent on the dollar, it will be seen that the actual rate of interest on these bonds ranged from seven to nine per cent. per annum.
Thus far the national banking money power succeeded in inducing Congress to grant every demand
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made by it. Not satisfied with the enormously valuable privileges bestowed upon it, this subtle power continued to appear at the opening of each session of the national legislature, and make new appeals for additional legislation in its interests.
Each new demand of the national banks met with prompt compliance from Congress, and the decrees of this organized, voracious money power werc registered upon the statute books of the nation by the most corrupt legislative body in the world.
On January 20, 1871, a bill was rushed through Congress by which the Secretary of the Treasury was authorized, in his discretion, to pay the interest on the national debt every three months.
Notwithstanding the fierce opposition displayed by the national banks against the United States notes and treasury notes, in spite of the efforts of Congress to withdraw from circulation the war money of the country by funding this currency into interest-bearing, nontaxable, long-time bonds, this paper money directly issued by the United States was so popular with the people that a very large amount remained in the channels of trade.
The people revered the greenback and United States note, as that money which came forward in time of deadliest peril; which armed, equipped and paid more than two million patriots, whose magnificent bravery won the greatest battles of modern times, and whose heroism secured the perpetuity of American institutions; while gold, the money of kings, the loaded dice of stock gamblers, fled at the first approach of danger; gold, whose value appreciated with every defeat of the Union cause; gold, that vulture which fattened and
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thrived upon the carnage of the great civil war, laughed the appeals of the nation to scorn.
In consequence of the further demands of the national banks, Congress, on the 20th of June, 1874, amended the National Ranking Act, which permitted these banks to withdraw the bonds deposited by them to secure the circulation of bank notes, and deposit, in lien thereof as security, the non-interest-bearing notes issued by the Government. Prior to the passage of this amendment, United States bonds had risen to a premium in consequence of the various acts of Congress culminating in the Credit Strengthening Act, and, therefore, this act was adopted by Congress to enable the banks to withdraw the bonds deposited by them, and make a large profit by selling them for the premium, many of which had been originally purchased for less than sixty cents on the dollar.
The operation of the amendment effectually contracted the 1ega1 tender currency of the country, for the substitution of United States notes and treasury notes in lieu of the bonds, diminished the volume of legal tender currency afloat to an extent equal to the bonds so withdrawn.
During this period, the national banking money power began to advance the argument that the character and, volume of money should be determined, not by the legislative power of the nation, but by what was called the "Business interests of the country."
It sought to educate the people to accept the doctrine, that it was dangerous to permit congress "To interfere with the dearest interests of the country," and that the solution of the money question must be settled by the national bankers, who assumed to hold the key to all monetary science.
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President Grant was wonderfully impressed with this great discovery of the bankers and, in his message to congress, December 3, 1874, he gave utterance to this Statement: -
"The experience and judgment of the people can best decide how much currency is required for the transaction of the business of the country. It is unsafe to leave the settlement of this question to Congress, the Secretary of the Treasury or the Executive. "
The President, therefore, as far as lay in his power, tacitly surrendered the constitutional power of Congress and of the Executive to deal with questions of finance, and conferred it upon the national banks.
The people to whom reference is made in this quotation from the President, were the national bankers, and the chief executive was willing to transfer the power of issuing and controlling money to that class of men, whose sole ambition was the extortion of the highest rates of interest, and who loved to shave notes and bonds when they purchased, and exact a premium when they sold.
On the 24th of January, 1875, after the congressional election of 1874, which returned a great Democratic majority in the House of Representatives, the specie resumption act became a law.
The enactment of this measure carried into execution that part of the Credit Strengthening Act where the United States solemnly pledged its faith to make provisions for the redemption of the United States notes in coin, which now legally meant gold.
One section of this law provided for the substitution of fractional silver coins for the fractional currency; a
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subsequent section abolished the charge of one sixth of one per cent for converting gold bullion into coin, thereby providing for the free coinage of gold at every United States mint.
The most important section of the Resumption Act is as follows: -
"That section 5777, of the Revised Statutes of the United States, limiting the aggregate, amount of the circulating notes of the National Banking Associations, bc, and is hereby repealed, and each existing banking association may increase its circulating notes in accordance with the existing law, without respect to said aggregate limit; and new banking associations may be organized in accordance with the existing law without respect to said aggregate limit; and the provisions of the law for the withdrawal and redistribution of national bank currency among the several states and territories are hereby repealed; and whenever and so often as circulating notes shall be issued to any such banking association, so increasing its capital or circulating notes, or so newly organized as aforesaid, it shall be the duty of the Secretary of the Treasury to redeem the legal tender United States notes in excess of only $3,000,000 to the amount of eighty per centum of the sum of national bank notes so issued to any such banking association as aforesaid, and to continue such redemption as such circulating notes are issued until there shall be outstanding the sum of $3,000,000 of such legal tender United States notes, and no more. And on and after the 1st day of January, A. D., 1879, the Secretary of the Treasury shall redeem in coin the United States notes then outstanding on their presentation for redemption at the office of the assistant treasurer of the United States, in the city of New York, in sums of not less than $50. And to enable the Secretary of the Treasury to prepare and provide for the redemption in this act authorized or required, he is authorized to use any surplus revenues from time to time in the
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treasury not otherwise appropriated, and to issue, sell, and dispose of, at not less than par in coin, either of the description of bonds of the United States described in the act of Congress approved July 14, 1870, entitled, 'An Act to Authorize the Re-funding of the National Debt,' with like privileges and exemption, to the extent necessary to carry this act into effect, and to use the proceeds thereof for the purpose aforesaid."
A critical examination of the Resumption Act will disclose the sinister purpose of the organized national banking money power to carry into execution, to the letter, the instructions couched in the Hazard circular. One of the strange features of this act which assumes to restore specie payments, is found in the express language of this statute. While Congress, by its solemn legislative decree, provided for the redemption of United States non-interest legal tender notes in gold, it did not require the national banks to redeem their circulating notes in anywise whatever.
On the contrary, the so-called Resumption Act provided for the substitution of national bank notes for the non-interest-bearing legal tenders issued by the government, although the national banking law made the United States notes a fund to redeem national bank notes.
Again: it was a contraction of non-interest-bearing legal tender notes, and expansion by the additional issue of national bank notes, which were mere promissory notes of the banks, the latter to be loaned by the bankers at a high rate of interest to the business men of the country. These circulating bank notes cost the bankers one cent on the dollar, and the Government was the redeemer of this currency. It was gold redemption of the greenbacks by the nation, an inflation of
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paper money by the banks at a, cost to them of one cent on the dollar.
It was a shrewd scheme to discredit the legal tender currency of the country, that the national banking money power might inherit that rich estate of issuing paper money.
Next, it repealed that part of the original National Hank Act which provided for the clue distribution of the currency throughout the states and territories, West, as well as East, South, as well as North. And it speedily resulted in the absolute control of the volume of money by the opulent bankers of the Hast, for the great capitalists of New York City, Boston, Baltimore, Philadelphia, and other large eastern cities held ninety per cent. of the United States bonds, without which there could be no national bank circulation. The domicile of the bond holder determined the location of the national bank, and the location of the national bank fixed the point at which the currency of the country could only be obtained, and therefore, the productive energies of the West and South werc at the mercy of the national banks. The two places fixed by this act for the redemption of legal tender notes were in New York City - the arena, of gold gamblers, stock speculators, railroad wreckers - and San Francisco. No sum less than fifty dollars in United States notes would be redeemed.
The reason of this limitation is very apparent. The banks of New York City are the reserve agents for the many thousand banks scattered over the country, and, therefore, hold hundreds of millions of dollars in deposits.
By hoarding the legal tender notes received in the
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ordinary course of business, the banks of New York City were enabled to accumulate many millions of United States notes, and present them for redemption at the sub-treasury; but the plain citizen who could not command fifty dollars of these notes was barred from the benefits of the Resumption Act.
The United States presented the key of the National Treasury to the national banks, with an implied invitation to help themselves to every thing in sight. It was a Government of national banks, for the national banks, and by the national banks.
Provision was made for the issue of bonds to obtain gold to redeem these legal tenders, and this was a part of the scheme to perpetuate the national debt, and as Jefferson said: "To swindle futurity on a large scale."
At the time of the passage of the laws upon which comment is made, General Grant was President of the United States.
The career of President Grant is one of the most unique and instructive in history. Of comparatively humble, but respectable origin, he did not, prior to the civil war, give any indications of winning that world-wide fame which has become the heritage of the American people.
That fratricidal strife was the tide that carried General Grant from obscurity to the highest pinnacle of renown. It was in the character of soldier that he gained an illustrious name.
In his character as a man, he gave abundant proof of many admirable traits, among which were magnanimity toward the vanquished, unimpeachable personal integrity, and lasting tenacity in his friendships, in which latter attribute he bore a striking resemblance to General Jackson.
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Yet this distinguished man of iron nerve became as plastic as wax in the hands of those to whom he attached himself, and his confidence in his trusted advisers was shockingly abused for the furtherance of many selfish and dishonest schemes. It is this latter fact that gave birth to those shameless abuses and scandals which have sullied the pages of political history.
Many eminent public men are of the opinion that his administration of civil affairs did not tend to the enhancement of his fame. A summary of the war legislation, in so far as it relates to the finances of the Government, exhibits these remarkable facts as to the existence of a remorseless money power:
First, Congress at the demand of the bullion brokers and gold gamblers of New York City and Boston, purposely depreciated the currency issued by the government by striking out its legal tender qualities, by refusing to receive its own money in payment of its taxes. It was high priced gold for the bond holder, and depreciated greenbacks for the patriotic soldier who offered up his life for his country.
Second, the passage of the national banking law, by which the government delegated its highest sovereign power - that of issuing money - to private corporations for private gain, resulting in a privileged class of capitalists, whose interests were wholly antagonistic to the welfare of the United States, thereby making a permanent creditor and debtor class, one the master, the other the servant.
Third, an alliance, offensive and defensive, of the national banking money power and the manufacturers,
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whose combined interests have dominated the legislation of Congress, by which the banks have practically secured a monopoly of the medium of exchange, and by which the manufacturers have secured a high protective tariff for their immediate benefit, and at the same time flooded their mills and factories with cheap foreign labor.
Fourth, the passage of laws, the effect of which was to enormously increase the untaxed wealth of a privileged class, who extort heavy tribute from the productive energy of the American people.
Fifth, The creation of a money power, foretold by Andrew Jackson, whose unlimited greed has appropriated to its own use the greatest portion of the wealth of the United States.
Sixth, A matured plan to perpetuate the public debt of the United States for the purpose of holding the people in subjection to the money power.
Seventh, An enormously extravagant administration of the Federal Government, as a part of the plan to fix a permanent debt on the nation.
Eighth, Senator Sherman, during all this period, was the chairman of the Finance Committee of the Senate, and he was the influential agent of the money power who shaped and molded that legislation, upon which was reared that imperial combination of moneyed influence which, to a very large extent, rules the press, the pulpit, the legislative bodies, and the courts of the country.
In view of the various financial measures enacted by Congress from 1865, to the passage of the Resumption Act of 1875, all of which tended to greatly appreciate stocks and bonds, and to divest the Government of its
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undoubted power to issue full legal tender United States notes, or greenbacks, the following significant extract from the most influential journal of Great Britain, the London Times, is hereby subjoined.
In 1865 the Times editorially stated: -
"If that mischievous financial policy which had its origin in the North American republic during the late war in that country should become indurated down to a fixture, then that Government will furnish its money without cost.
"It will have all the money that is necessary to carry on its trade and commerce.
"It will become prosperous beyond precedent in the history of the civilized nations of the world. The brain and wealth of all countries will go to North America. That Government must be destroyed or it will destroy every monarchy on this globe."
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CHAPTER III
NATIONAL BANKS AND SILVER
"The high-handed career of this institution imposes upon the constitutional functionaries of this government, duties of the gravest and most imperative character - duties which they can not avoid, and from which I trust there will be no inclination on the part of any of them to shrink."- Andrew Jackson.
The success of the national banking money power in securing control of Congress, and, through that body, an oppressive monopoly of the currency of the country, met the most sanguine expectations of the men who hoped to rule the industries of the people with an iron hand.
The outlines of that great scheme of the national banks, which aimed to throw the entire business of the country on a credit basis, were now plainly apparent, and it became patent that the plan was to be consummated by placing the entire volume of currency in the hands of the bankers.
Under the workings of the national, bank system, all circulating bank notes, before they would reach the hands of the mass of the people and thus bc thrown into the channels of trade, must first pass through the to11 gates erected over the counters of the bankers, making them at once the lenders of money, and the great majority of our citizens, borrowers of that currency, gratuitously bestowed by the government upon the wealthiest moneyed corporations of the United States.
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All the industries were compelled to pay usury to the most traitorous class of our citizens. The banks were enabled to lay the foundations of that colossal structure of credit, which has plunged the people into an abyss of indebtedness from whence they will not emerge for generations.
Up to the time of the passage of the Resumption Act,the banking monopoly saw no difficulty standing in its way to keep it from being the master of all the property and industry, While corrupt congresses, notorious for the infamous scandals which smirched the reputations of some of the foremost men of the Republican party, bartered away the most precious rights of the people, nature came to the rescue by affording a great supply of that most precious metal - silver.
The bank monopoly at once caught the alarm, and the plan was matured in London and Wall street to assassinate the silver dollar.
Under the free coinagc of gold and silver, the national banks could not control the volume of money, and, therefore, the position taken by this monopoly wasan essential part of that gigantic conspiracy to demonetize silver, and thus maintain its grasp on the property of the people; furthermore, a fight must bc waged against the standard silver dollar as a part of the scheme to sustain the supremacy of New York City as the great money center of the country.
Moreover, an adequate supply of silver meant the freedom of the agricultural districts of the West and South from the Financial domination of the cent per cent. men of the East.
The national bank autocrats saw, in the rich deposits of silver in the Western States, the danger that men-
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aced their power, and they made haste to strike down the silver dollar, which, in their fears, would become the regenerator of the financial condition of the people. Silver dollars meant cash, national bank notes meant credit, and therefore the bond-holders and bankers of London and New York City decreed that silver must die.
As a preliminary statement of the reason for the opposition of national banks to the coinage of silver, it must be born in mind, that prior to the adoption of the Federal Constitution, the United colonies, under the Articles of Confederation, had no popover to establish mints, and, therefore, they had no national system of money.
This want of uniform coinage and currency laws was one of the urgent reasons which lcd to the assembling of the constitutional convention that eventually framed the national charter.
This body of able and learned men, justly celebrated for their wisdom and knowlcdge, provided for a uniform system of money for the people. They knew that without a, national system of coinage and currency, no people could become great in commerce and industry. The power of determining what should constitute money, was lodged in the general government by that part of section eight, of article one, of the constitution, which is as follows: "Congress shall have power to coin money, regulate the value thereof and of foreign coin."
The convention which framed this great instrument contained some of the ablest political economists and financiers of that day, among whom werc Benjamin Franklin, Robert Morris, the eminent banker, James
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Madison, Alexander Hamilton, and Goveneur Morris These distinguished men knew that the essential nature of money was its function as a medium of exchange, and they knew that this function was impressed by the sovereign power of the nation.
Hence, the power to coin money and to regulate its value, was decreed to fall within the sphere of the lawmaker, rather than left to the ability of those who corner gold and silver to enhance their profits.
The absurd theory of our modern statesmen that commerce, and not law, fixes the value of money has never been recognized as sound doctrine until the national banking monopoly demanded the power of issuing currency as a vested right.
Upon the adoption of the Constitution, and after the election and inauguration of General Washington to the presidency of the United States, Congress, on the 2d of April, 1792, enacted the first coinage law under the new order of things. The system of coinage adopted by Congress, was based on the decimal plan which sprung from the imperial intellect of Jefferson, to whom belongs the honor of inventing and establishing that great reform.
The Coinage Act of April 2, 1792, is as follows: -
"That the money of account of the United States shall be expressed in dollars or units, dimes or tenths, cents or hundredths, mills or thousandths, a dime being the tenth part of a dollar, a cent the hundredth part of a dollar, a mill the thousandth part of a dollar and that all accounts in the public offices and all proceedings in the courts of the United States shall be kept and had in conformity to this regulation.
"That a mint for the purpose of a national coinage be and the same is established, to bc situated and car-
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ried on at the sent of the government of the United States for the time being.
"There shall bc, from time to time, struck and coincd at said mint, coins of gold, silver, and copper, of the following denominations, values and descriptions; viz., Eagles, each to be of the value of ten dollars, or units, and to contain 247 1/2grains of pure, or 270 grains of standard gold. Half eagles, each to be of
the value of five dollars, or units, and to contain 123 3/4 grains of pure, or 135 grains of standard gold. Quarter eagles, each to bc of the value of two and one-half dollars, and to contain 61 7/8 grains of pure, or 671/2grains of standard gold. Dollars or units, each to be of the value of a Spanish milled dollar, as the same is now current, and to contain 371 1/4 grains of pure, or 416 grains of standard silver. Half dollars, each to be of half the value of the dollar or unit, and to contain 18 55/8 grains of pure, or 208 grains of standard silver.
Quarter dollars, each to be of one-fourth the value of the dollar or unit, and to contain 92 13/16rains of pure, or 104 grains of standard silver. Dimes, each to be one-tenth of the value of a dollar or unit, and to contain371/8grains of pure, or 413/4 grains of standard silver. Half dimes, each to be of the value of one-twentieth of a dollar or unit, and to contain 18 9/10 grains of pure, or201/6grains of standard silver. Cents, each to be of the value of one hundredth part of a dollar, and to contain 11 pennyweights of copper. Half cents, each to be of the value of half a cent, and to contain 5 1/2 pennyweights of copper."
The ratio of the value of gold to silver in all coins provided for by the act of April 2, 1792, was fixed at fifteen to one, that is to say, the statute made fifteen pounds weight of pure silver equal in value in all payments to one pound weight of pure gold.
Section Fourteen of this act provided for the free coinage of gold and silver in the following language:
"That it shall be lawful for any person or persons to
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bring to the said mint gold and si1ver bullion, in order to their being coined; and that the bullion so brought shall be there assayed and coined as speedily as may after the receipt thereof, and that free of expense to the person or persons by whom the same shall have been brought."
The free coinage thus provided for by the act of April 2, 1792, placed gold and silver coinage directly in the hands of the people. The money thus coined would not be compelled to go through the banks as intermediaries before it reached the channels of trade.
This coinage law was the joint product of the study and research of Hamilton and Jefferson, and it made the silver do1lar containing 371 1/4 grains of pure silver, the unit of account in the exchange of commodities and for the payment of debts.
It may be inquired why the Spanish milled dollar was taken as the basis of the American unit of account.
At that time, Spain was the great dominating power in the western hemisphere, and she exercised jurisdiction over what is now Texas, California, New Mexico, Nevada, Mexico proper, the Central American States, the greater portion of South America and the West Indies.
It was the mines of the Spanish colonies, from 1500 to 18oo, that poured hundreds of millions of the precious metals into the lap of European commerce.
A single mine of South America produced silver to the amount of $6oo,ooo,ooo.
During the period that the Spanish colonies poured forth their streams of wealth, and saved the dying industries of Europe from total extinction, the chivalry of Christian England went forth in their piratical craft
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in a time of peace, and plundered the Spanish treasure ships of their rich cargoes. British historians yet gloat over the naval prowess that robbed an unoffending power in time of profound quiet.
The reasons why this young republic appropriated the Spanish milled dollar as the model upon which to base its coinage laws were these; First, a large number of Spanish coins were in circulation in this country, and these coins were of a very high standard of purity; second, the people were familiar with the Spanish milled dollar, and its adoption as money saved the expense of re-coinage; third, the United States maintained an extensive commerce with the Spanish West Indies, and the adoption of a coin similar to the Spanish dollar facilitated trade wonderfully, and gave the enterprise of this country the advantage over that of foreign nations, whose system of coinage did not correspond with that of Spain and her colonies.
To give the reader a correct understanding of the coinage laws of the United States from 1790 to 1873, the following summary of the various enactments of congress providing for the mintage of gold and silver coins will be necessary.
The act of congress of March 2, 1799, fixed the value of foreign coins, and made them legal tender.
On April 10, 18o6, the gold coins of Great Britain and Portugal, as well as those of France and Spain, were made legal tender for the payment of all debts and demands within the United States. The same act of congress made the Spanish milled dollar and the crown of France, which were silver coins, legal tender and current in this country.
During the year 1805 President Jefferson suspended
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the coinage of the silver dollar at the United States mint.
The reasons adduced by him in ordering the cessation of the coinage of the dollar were stated in a report made by Mr. Ingham, Secretary of the Treasury under President Jackson.
Secretary Ingham said that President Jefferson ascertained that the newly coined silver dollars, being of full weight, bright, and clean, were shipped out of the country by speculators; second, it was a useless expense to coin these dollars, when the law made the foreign silver coins full legal tender for the payment of all debts, public and private; third, it was more desirable to coin silver bullion into half dollars, quarter dollars, dimes and half dimes to serve as change.
By act of Congress, March 5, 1823, the gold coins of Great Britain, Portuga1, France and Spain were received in payment by the United States on account of sales of public lands.
By act of June 25, 1834, the following silver coins were made of legal value, and passed current as money within the United States for the payment of all debts and demands at the rate of one hundred cents to the dollar; via., The dollars of Mexico, Peru, Chili, and Central America; this act fixed the value of the Brazilian dollar, and the silver five-franc piece of France and it passed current.
By the same act, the gold coins of Great Britain, Portugal, Brazil, & France, Spain, Mexico, and Columbia werc made legal tender for the payment of all debts and demands within the United States.
On the 28th of June, 1834, the quantity of gold in the eagle, or ten dollar piece, was reduced from 247 1/2
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grains of pure gold to 232 grains, the amount of standard gold in that coin was reduced from 270 grains to 258 grains.
Under the act of April 5, 1792, the legal ratio of silver to gold was fifteen to one, which ratio undervalued gold.
Since 1803, France and the Latin countries adopted a legal ratio of fifteen and one half of silver to one of gold, and as a consequence, gold, being undervalued in the United States, was withdrawn from circulation here, and sold abroad at a profit by the bullion brokers who were ever on the alert for gain.
The change made the act of June, 1834, undervalued silver, the ratio of that metal to gold being fixed at fifteen and ninety-eight one-hundredths to one, but the principal reason assigned for the overvaluation of gold by the act of June 28, 1834, was to provide coins of large denominations to take the place of the notes and bills issued by the United States Bank. In other words, President Jackson fought the United States Bank with a gold coinage as a legitimate weapon to conquer that money power.
It has become the settled policy of those financiers who so urgently advocate a single standard of gold, to point to the act of June 28, 1834, as the establishment of that system. This has been the gist of the numberless arguments of the gold standard advocates, constantly reiterated in the halls of congress and elsewhere, with a brazen disregard of truth that approaches desperation.
The congressional legislation by which a very large volume of gold coin was brought into circulation after 1834, Was directly opposed to that policy which secured he demonetization of silver in 1873.
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It is an absolute falsehood to assert that the single standard of gold was adopted by this nation in 1834, for the plain reason that the mints of the United States remained open to the free and unlimited coinage of both gold and silver, and the law made these coins full legal tender for the payment of all debts and demands, both public and private.
The silver dollar still remained the unit of account.
By the act of January 18, 1837, a slight change was made in the alloy in the gold and silver coins. The standard of purity was fixed at nine tenths of pure metal to one tenth of alloy.
By this alteration in the purity of the coin, the standard was raised, and, therefore, the weight of the silver dollar and fractional silver coins was slightly reduced.
The material part of that act is as follows: -
"The standard for both gold and silver coins of the United States shall hereafter be such that of one thousand parts by weight, nine hundrcd shall bc of purc metal and one hundred of alloy, and the alloy of silver coins shall be of copper, and the alloy of the gold coins shall be of copper and silver, provided that the silver does not exceed one half of the alloy.
"Of the silver coins the dollar sha11 be of the weight of 4121/2grains, the half dollar of the weight of 206 1/4 grains, the quarter dollar of the weight of 103 1/8 grains, the dime or tenth part of a dollar of the weight of 41 1/4 grains, and the half clime or twentieth part of a dollar of the weight of 20 5/8 grains.
"And that dollars, half dollars, quarter dollars, dimes and half dimes shall be legal tender of payment according to their nominal value for any sums whatever.
"Of the gold coins, the weight of the eagle shall be 258 grains, that of the half eagle 229 grains, and of the quarter eagle 64 1/2grains.
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"And that for all sums whatever, the eagle shall be a legal tender of payment for ten dollars, the half eagle for five dollars, and the quarter eagle for two and one-half dollars."
The alloy in the silver dollar was reduced in quantity, while the pure silver of 3711/4grains, as originally fixed by the act of April 2, 1792, was retained in the standard dollar, and it remained the unit of account and was of unlimited legal tender.
This fact is borne out by the act of March 3, 1849, which provided for the coinage of double eagles and one dollar gold pieces.
We will quote the exact language of this statute, which is as follows: -
"There shall be from time to time struck and coined at the mint of the United States and branches thereof - conformably in all respects to law, and conformably in all respects to the standard for gold coins now established bylaw - coins of gold of the following denominations and value; viz., double eagles, each to be of the value of twenty dollars or units, and gold dollars, each to be of the value of one dollar or unit.
"For all sums whatever the double eagle shall be a legal tender for twenty dollars, and the gold dollar shall be a legal tender for one dollar."
This statute explicitly recognizes a unit, and that unit of the exchange value of money was the silver dollar, the coinage of which was provided for by the act of April 2, 1792. The value of these gold pieces were respectively fixed by referring them to a unit, and up to this time the sole unit of account in the United States from which calculations werc made was the silver dollar.
By act of congress February 21, 1853, a change
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was made by reducing the weight of the fractional silver coins.
The language of this statute is as follows: -
"That the weight of the half dollar or piece of fifty cents shall be 192 grains, and the quarter dollar, dime and half dime shall be respectively one-half, one-fifth and one-tenth of the weight of the half dollar.
"The silver coins issued in conformity with the above section shall be legal tenders in the payments of debts for all sums not exceeding five dollars.
"From time to time there shall bc struck and coined at the mint of the United States and the branches thereof conformably in all respects to the standard of gold coins now established by law, a coin of gold of the value of three dollars or units."
This act, which was the first legislation limiting the legal tender quality of silver coins, is pointed to by the single gold standard advocates as a demonetization of silver.
In order that we may ascertain the intention of Congress in enacting this law, it will be necessary to look at contemporaneous history, the evils sought to be corrected, and the remedy applied.
The highest courts of the land have adopted this principle as the cardinal rule in the interpretation and constrution of statutory law, and it is a safe one for the ordinary Individual.
At the time of the passage of this act of Congress, the bullion in the silver was more valuable as a commodity than the bullion in the gold dollar, consequently the silver dollars were withdrawn from circulation and sold as bullion in the European markets at a profit.
To remedy this, Congress reduced the weight of the
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fractional silver coins, and limited their legal tender debt-paying power, but left the coinage of the silver dollar free and unlimited.
Congress correctly foresaw that the owners of silver bullion, from motives of self interest, would not coin their bullion into silver dollars, when they would be gainers by its coinage into light weight fractional coins.
It would require 4121/2grains of standard silver for a one dollar piece, or unit, but it would need only 384 grains for the coinage of two half dollar pieces.
The limitation of legal tender power of the fractional silver coins under the act of 1853, was embodied in that law for the express purpose of preventing their exportation to foreign countries.
Another reason for the enactment of this statute arose from the fact that the miners of California and Australia were pouring hundreds of millions of dollars of gold into the arteries of commerce, and a number of leading financial writers of France and Germany urged their respective countries to demonetize gold, for the express purpose of increasing the value of bonds and annuities.
Michel Chevalier, a member of the Council of State of Napoleon III. at this time, published a work entitled, "The Probable Fall in the Value of Gold."
In this volume he strongly urges the demonetization of gold, giving as his reason for this position that it was becoming too abundant, and that its purchasing power had greatly fallen.
Chevalier says: -
"If we would particularize the persons who would be more or less deeply affected by the fall in
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gold, we have only to select those whose income will not find itself augmented naturally and by a self-adjusting process, in exact proportion to the fall, in gold. The national creditor is the characteristic type of this class of sufferers. All those persons whose incomes, expressed in monetary units, remain the same would be injured by the change to the extent of the half of their income, all other things being equal.
"All commodities excepting gold and every kind of property excepting that of which the income is, from the present, fixed, as is the case with government funds, ought, from the moment that the monetary crisis is terminated, to have attained in a gold currency double the price which they are at present worth. It wi11 be the same eventually with wages (that is to say wages would double), and with all personal services, whether rendered in the factory or on the farm, or from the liberal professions."
In summing up his arguments in favor of the demonetization of gold, Chevalier states the following conclusions: -
"Thus as a definite analysis, the properties of lands, houses, and other real estate, manufacturers, merchants, and their auxiliaries of every kind; public functionaries of all ranks; and also those who follow the different learned professions, will all find themselves in the end compensated in the new state of things with advantages which they now enjoy, all other things being equal. It is another class of persons, the national creditor, whom we have previously defined in a general way who have to submit to n sacrifice in the proportion to the fall in the precious metal."
In his plea for the bond holders, Chevalier, unlike those American financiers who worship a single standard, displays one admirable trait. Hc truthfully states the reasons why he urges the destruction of gold as money. He says that the coinage of those large
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amounts of gold from the mines of California and Australia will double the volume of money, and therefore diminish its purchasing power one-half, and that the bond holder would suffer loss.
Finally, Chevalier sums up the effect of a change from falling prices to rising prices, in which he said: -
"In time the change will profit those who live by present labor; it will injure those who live on the fruits of past labor, be it their own or that of their fathers. In this respect it will act in the direction with the greater part of those evolutions which are accomplished in virtue of the great law of civilization to which ordinarily we assign the noble name of Progress.
"It remains to add that in society as it is at present organized, the number is very small of those whom it can truly be said that they live on the fruits of past labor. Real property, rents, and the interest of investment depend in such a degree on the present labor of those who pay them, that in an important sense those who receive them live rather on the present labor of others than upon past labor."
Chevalier positively admits that a small volume of money benefits a very small number, and those are the most undeserving.
The American gold standard advocate is not so frank in his reasons for a single standard. Every national banker, and single gold standard financier is in favor of that system of finance, because the laboring man, the widow, and the orphan will be the sole beneficiaries of a contracted volume of money?
The arguments of that class of political economists teem with figures, showing that the workingmen, widows, and orphans are the chief stock holders in national banks, loan and trust companies, and that they constitute the largest class of depositors in savings
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banks, hence, the fear of this phi1anthropic (?) class of disinterested patriots, that the poor toiler, the friendless widow and orphan must be protected by a single standard of gold!
Germany and some of the sma11er European states actually demonetized gold in 1857, and adopted a silver standard.
>From the action of these states in thus attempting to cripple the Unite<1 States by demonetizing gold, and going on a silver basis, a great struggle arose in Germany and Austria to obtain silver.
Therefore, to prevent these countries from drawing their supp1ies of that metal from the United States, Congress reduced the weight and limited the legal tender power of the minor silver coins, and thus the volume of silver in circulation here was protected from exportation to the silver standard countries.
Furthermore, Congress now cndeavored to supply the people with a uniform system of gold and silver coinage, and, in the execution of that policy, enacted the law of March 3, 1853, which provided that the Secretary of the Treasury should establish an assay office in the city of New York, for the assaying and casting of gold and silver bullion and foreign coin into bars, ingots, or disks, and the assistant treasurer at New York was made the treasurer of such assay office; and he was authorized, upon the deposit of gold or silver bullion or foreign coin, and the ascertainment of its net value, "To issue his certificate of the net value thereof payable in coins of the same metal as that deposited."
The certificates so issued by the assistant treasurer were made receivable at any time within sixty days from the date thereof, in the payment of all debts due to
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the United States at the port of New York for the full sum therein certified.
Thus the foreign importer, in the payment of the duties on goods, wares, and merchandise at the custom house, would take his foreign coin to the assay office, have its finencss determined, obtain a certificate for the amount of its value, and pay the duties imposed upon his goods with said certificate, Such foreign coins were cast into bars and transformed into coins of the United States.
By the act of February 21, 1859, Congress fixed the value of the fractional parts of the Spanish pillar dollar, and the Mexican dollar as follows; viz., "The fourth of a dollar, or piece of two reals at twenty cents, the eighth of a dollar, or piece of one real at ten cents, and the sixteenth of a dollar, or half-real, at five cents."
These coins at the valuations thus fixed by law were receivable at the Treasury of the United States, the post offices, and land office, as legal tender for the payment of debts and demands.
The former acts of Congress, authorizing the circulation of foreign gold and silver coins, and declaring the same a legal tender for the payment of debts, were repealed.
The reason for the repeal of former laws declaring foreign gold and silver coins legal tender was based on the following facts: first, the United States had become, with the discovery of the rich gold mines of California, the greatest producer of gold in the world, 'and it endeavored to supply the people with a volume of coins stamped in American mints; second, nearly sixty years had elapsed since the passage of the first
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coinage law, and the capacity of the United States mints being greatly increased, Congress, by said repeal, aimed at a re-coinage of the foreign gold and silver coins into American coins, and by this means supply a homogeneous circulation of gold and silver.
Six years had elapsed since the passage of the law of March 3, 1853, authorizing the issuing of certificates for deposits of foreign coin, and the act of February 21, 1859, was merely an accumulative statute to that act for the transformation of foreign coin into that of the United States.
The latter act did not take away the privilege of the holder of foreign coin to receive certificates of deposit at the assay office in New York City, and the issuance of these certificates was of great convenience to the owner of bullion and such coin. From the act of March 3, 1853, dates the origin of gold and silver certificates.
>From 1859 to 1873 but few changes were made in the coinage laws, and these were comparatively unimportant in their nature.
Prior to 1861, the annual production of silver in the United States never exceeded the value of $1oo,ooo, on the other hand, the amount of gold produced in the mines of California, from 1848to the outbreak of the war, amounted to hundreds of millions of dollars. The greatest amount of gold produced from American mines in any one year was in 1853, when it reached the enormous sum of $65,ooo,ooo. The total product of gold from the mines of the United States, from 1848 to 1861 inclusive, reached the grand total of $7oo,ooo,ooo.
In the year 1859, that great deposit of silver, the
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Comstock Lode, was discovered in Nevada, and from this period the United States is reckoned among the greatest producers of silver in the world.
In 1860 the production of silver had risen to $150,000, which, up to this period, was the greatest amount produced in the United States in any one year. In the same year the production of gold in California alone was $45,000,000 in value.
In 1863, the value of the product of silver had risen to $8,500,000.
In 1867, silver to the amount of $I3,500,000 was produced from the mines of the west - chiefly in Nevada.
The production of gold for the same year was $51,725,000.
At this period, the national debt had reached the enormous sum of $2,7oo,ooo,ooo, the interest of which was payable in coin.
The whole annual product of the gold mines in the United States would scarcely sufficient to pay one-half of the annual interest charge upon the national debt held by the national banking money power.
Therefore, the control of the gold supply of the country was in the firm grasp of the national banks and bond holders.
It is much easier for the money power to manipulate the volume of gold than that of silver, in as much as gold contains a much greater value in a proportionately smaller bulk than silver.
Again, gold bullion is converted into coins of large denominations, chiefly ten and twenty dollar gold pieces; while silver is coined into dollars and fractional parts thereof.
>From the foregoing facts, gold is the money of the wealthy, while silver is the money of the laborer.
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It is the small coins that most actively circulate in the channels of trade; it is gold that is hoarded by the miser and the capitalist.
The small coins that are in active circulation have always eluded every effort to hoard them in large quantities.
The rapid increase in the production of silver in the United States meant the financial liberation of the people from the money power of the East. Thc prospects for an enormous supply of silver from the western mines threatened the supremacy of New York City and London as the money markets of the world.
The owner of silver could take his bullion to the mint, have it coined into standard silver dollars of full legal tender debt, paying power, receive them after their mintage, and transact business by their means; he was not under the necessity, when in need of money, to make application to a national bank for a loan of its circulating notes, whose sole credit rested on the solvency of the United States. He was not compelled to pay toll to the national banks for the use of their debts as money.
The national banking money power could not control the silver dollar, as long as the law authorized its free coinage, and consequently, a gigantic conspiracy was formed in London and New York City to demonetize silver.
This great money power whose almost absolute control of the currency was surely driving all business to a credit basis, deliberately planned the destruction of that precious metal whose value has been far more stable than that of gold.
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CHAPTER IV.
CONSPIRACY OF NEW YORK AND LONDON BANKERS AND BOND HOLDERS TO
DEMONETIZE SILVER.
"I have before me the record of the proceedings of this House on the passage of that measure, a record which no man can read without being convinced that the measure and the method of its passage through this House was a 'colossal swindle.' I assert that the measure never had the sanction of this House, and it does not possess the moral force of law." - William S. Holman.
Prior to the demonetization of silver in the United States, England and Portugal were the only nations whose standard of monetary value was based on gold.
After the great Napoleonic wars which convulsed Europe for so many year's, finally ending in the overthrow of the military power of France at Waterloo in 1815, the national debt of England reached a colossal figure, exceeding four billions of dollars.
This vast debt was created by the efforts of Great Britain in her struggle to crush Napoleon.
The greater portion of this immense burden on the industries of the people of that country was purchased at a very heavy discount by the bond holders.
At this time England was the great naval power of the world, and her merchant vessels entered the ports of every civilized and semi-civilized nation; and she made good her boast that she was "Mistress of the Seas."
In 1816, England adopted a single gold standard as the basis of her financial system. Silver was made a
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legal tender to an amount not exceeding forty shillings for any one payment.
This act of parliament was procured through the influence of the immensely wealthy bankers and fund holders, with the sole aim of enhancing the value of the vast debt held by them, and with the avowed purpose of perpetuating its existence.
Sir Moreton Frewen, an eminent writer and financier of London, charges that this measure was instigated by the capitalists of England, and that it was class legislation of the worst type.
The financial system thus adopted by parliament during the ministry of Lord Liverpool consisted of gold as the standard of value, silver as subsidiary coin used in the small transactions of business, and notes issued by the Bank of England, the latter being a credit currency redeemable in gold by the bank.
In 1844, the charter of the Bank of England was amended by act of parliament, by which that corporation must pay for all gold bullion or mutilated coins offered at its counter, the sum of three pounds, seventeen shillings, and nine pence for each ounce of gold tendered to it. This price was equivalent to eighteen dollars and ninety-two cents in money of the United States.
This act of parliament was the matured result of the policy of Sir Robert Peel, at that time the Prime Minister of England, and it fixed the price of gold throughout the British empire in every part of the world, and it gave notice to the owners of gold bullion everywhere, that this great bank stood ready, at all times, to pay the price fixed by the law of its creation. Gold would never go below that price, although there was no
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limitation in the law by which the bank was forbidden to pay more for that precious metal.
The evident purpose of that policy fixing the minimum value of gold was the prohibition of speculation in it by bullion brokers. Another important object of the passage of this law was to make London the money market of the world, and therefore the center of exchange.
Moreover, at the time of the parliamentary act of 1844, the colossal debt of England was payable in gold, and the fund-holding class of Great Britain was instrumental in procuring the passage of this act, fixing the minimum price of gold by law with the avowed intention of enhancing its purchasing power over all other forms of property.
The policy embodied in the Peel Act is the basis of the financial system of England.
After the close of the civil war in America, Great Britain had become a large holder of United States bonds, railway stocks, and securities, and other obligations of this country, to the amount of many hundreds of millions of dollars, the great majority of which were purchased for a pittance.
The great banking houses of Net York City and Boston are the agents of the money lending classes of Great Britain, and are the mere echoes of Lombard street, London.
Since the discovery of the enormously rich gold mines of Australia, which rivaled those of California, she ranks as one of the leading producers of gold, while the mines of the latter are giving indications of exhaustion.
The production of silver in the British empire was
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comparatively small, while that of the United States was rapidly increasing in value.
The amount of English capital invested in the national banking system is unknown, but is undoubtedly very large, and it was the bankers of London who suggested the scheme of the present national banking law, as shown by the circular issued by James hazard, of which mention was made in the second chapter of this work.
It must be borne in mind that, from 1862 to 1873, United States Senator John Sherman was the Chairman of the Finance Committee of the national Senate, to which was referred, and which framed and moulded the various financial measures placed upon the statute books of the nation. He was the great predominating power in the financial legislation of Congress.
In 1867, the great International Exposition at Paris was held, to which the nations of the world were invited by the Emperor of Prance.
Secretary of State Seward, on behalf of the United States, appointed Samuel B. Ruggles as the commissioner to represent this country at that magnificent undertaking.
Napoleon III, the Emperor of France, on the 4th of January, 1867, extended an invitation to all the powers, including the United States, to hold a conference in Paris, for the purpose of extending the principles of the Latin Union throughout the commercial world. This Union was originally formed December 23, 1865 by and between France, Italy, Greece, Belgium, and Switzerland, whereby these five nations agreed to establish for themselves jointly a system of common coinage, weights, and measures, as a means for the promotion of commerce.
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The monetary system adopted by the Latin Union provided for the free coinage of both gold and silver at a ratio of fifteen and one-half to one.
It also made provision in its articles by which any other nation could become a member of the convention.
Article 12 of the union was as follows; viz.,-
"Any other nation can join the present convention by accepting its obligations and adopting the monetary system of the union in regard to gold and silver coins."
The invitation of the French Emperor was accepted by the commercial nations of Europe and America, and Mr. Ruggles was appointed as the representative of the United States.
Senator Sherman, who was the Chairman of the Committee on Finance of the Senate, on information of the receipt of the invitation of the Emperor, visited London in the spring of 1867, prior to the convening of this monetary conference. After consulting with the London bankers and capitalists, he hastened to Paris where the conference was to convene in the near future, and in reply to a note of Ruggles, sent a communication to that gentleman in which he advocated the adoption of a single gold standard.
The material part of this remarkable letter to Mr. Ruggles is as follows: -
"Hotel Jardin des Tuileries, May 18, 1867.
"My Dear Sir: Your note of yesterday, inquiring whether Congress would probably, in future coinage, make our gold dollar conform in value to the gold 5-franc piece, has been received.
"There has been so little discussion in Congress upon the subject that I cannot base my opinion upon anything said or done there.
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"The subject has, however, excited the attention of several important commercial bodies in the United States, and the time is now so favorable that I feel quite sure that Congress will adopt any practical measure that will secure to the commercial world a uniform standard of value and exchange.
"The only question will be how this can be accomplished.
"The treaty of December 23, 1865, between France, Italy, Belgium, and Switzerland, and the probable acquiescence in that treaty by Prussia, has laid the foundation for such a standard.
"If Great Britain will replace the value of her sovereign 2 pence, and the United States will reduce the value of her dollar something over 3 cents, we then have a coinage in the franc, dollar, and sovereign easily computed, and which will readily pass in all countries; the dollar as 5 francs, and the sovereign as 25 francs.
"This will put an end to the loss and intricacies of exchange and discount.
"Our gold dollar is certainly as good a unit of value as the franc, and so the English think of their pound sterling. These coins are now exchangeable only at a considerable loss, and this exchange is a profit only to brokers and bankers. Surely each commercial nation should be willing to yield a little to secure a gold coin of equal value, weight, and diameter, from whatever mint it may have been issued.
"As the gold 5-franc piece is now in use by over 60,000,000 of people of several different nationalities, and is of convenient form and size, it may well be adopted by other nations as the common standard of value; leaving to each nation to regulate the divisions of this unit in silver coins or tokens.
"If this is done France will surely abandon the impossible effort of making two standards of value. Gold coins will answer all the purposes of European commerce. A common gold standard will regulate
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silver coinage, of which the United States will furnish the greater part, especially for the Chinese trade."
It will be seen from the statements volunteered by Mr. Sherman in his letter to Mr. Rugglcs, that he was endeavoring to leave the impression upon this conference, that the United States was in favor of a single standard of gold; and that the effort of Prance in making two standards of value was impossible; and that a common gold standard would regulate silver coinage.
The position assumed by Senator Sherman had immense influence, for at that time he held the most important position on the leading committee of the United State Senate.
He spoke as one having authority, and gave his moral influence to that financial policy which has finally destroyed one-half of the money metals of the world.
While in England Mr. Sherman was evidently ascertaining the views of influential persons and bodies upon this proposed change of the coinage laws. We quote further from his letter to Mr. Ruggles in which he says:
"In England many persons of influence and different chambers are earnestly in favor of the proposed change in the coinage. The change is so slight with them that an enlightened self-interest will soon induce them to make it, especially if we make the greater change in our coinage."
This letter is an important link in the chain of evidence that tends to prove a concerted plan on the part of British and American financiers to effect a momentous change in the coinage laws of the United States, a change that resulted in the demonetization of silver.
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Senator Sherman furnished the best of evidence, that, "Many persons of influence and different chambers" of a foreign country mere taking deep interest in the coinage laws of a nation to which they owed no allegiance.
Mr. Sherman was a leading member of the United States Senate, and it is deducible from his writings that, after ascertaining the views of these "influential persons and chambers" as to what system of coinage would be satisfactory to them, he immediately proceeded to carry them into effect by introducing a bill to that end.
The phrase, "Many persons of influence and different chambers," undoubtedly signifies the bankers and other fund holding classes of Great Britain, who mere interested in securing legislation that would enhance the value of stocks and bonds.
This letter of the Senator to Commissioner Ruggles is a voluntary confession from Mr. Sherman, that he was in London in conference with influential interests which were earnestly in favor of the proposed change in the standard of money.
On the 30th of May, 1867, Mr. Ruggles transmitted a communication to Secretary of State Seward, in which he states that the letter of Senator Sherman urging the adoption of a single standard of gold was laid before the International Committee having the question of uniform rain under special examination.
In this communication, Mr. Ruggles informs the Secretary of State of an interview held with Napoleon, with reference to the coinage of gold and silver, in the course of which the French emperor propounded the following significant question: "Can France do anything more in aid of the ivory?"
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We here quote the reply of Mr. Ruggles to the question of the
emperor in his own language; viz.,-
"To which it was replied, France can coin a piece of gold of twenty-five francs, to circulate side by side on terms of absolute equality with the half eagle of the United States and the sovereign, or pound sterling, of Great Britain, when reduced, as they readily might be, precisely to the value of twenty-five francs. The emperor then asked, 'Will not a French coin of twenty-five francs impair the symmetry of the French decimal system?' To which it was answered, 'No more than it is affected, if at all, by the existing gold coin of five francs," that it was only the silver coins of Franco which were of even metric weight, while every one of its gold coins, without exception, represented unequal fractions of the meter.
"It was then stated to the Emperor that an eminent American statesman, Mr. Sherman, Senator from Ohio, Chairman of the Finance Committee of the Senate of the United States, and recently in Paris, had written an important and interesting letter, expressing his opinion that the gold dollar of the United States ought to be and readily might be reduced by Congress, in weight and value, to correspond with the gold 5-franc piece of France; that the letter was now before the International Committee having the question of uniform coin under special examination, to which letter, as being one of the best interpretations of the views of the American people, the attention of the public authorities of France was respectfully invited. The emporer then closed the audience by repeating the assurances of his gratification that the important international measure in question was likely to receive active support from the United States.
"The letter of Mr. Sherman, above referred to, dated the 18th of May, 1867, originally written in English, was presented in a French translation a few days afterward to the International Committee in full session, where it was received with unusual interest and
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ordered by the committee to be printed in both languages. A copy is herewith transmitted for the information of the Department of State."
Upon a fina1 vote in the conference, the influence of England and John Sherman succeeded in defeating the adoption of a bi-metallic standard, and a single standard of gold was agreed upon by the conference with but a single dissenting vote. Hence, it will be seen that John Sherman and Samuel B. Ruggles were the two eminent persons whose influence was exerted against the adoption of the sagacious policy of the Emperor of France, which had for its object an international standard of both gold and silver at a ratio of fifteen and one-half to one.
It is evident that Senator Sherman exerted his great influence in defeating international bi-metallism, the adoption of which would have resulted in untold benefits, not only to the United States, but to the world at large.
As the first step for carrying into execution the scheme outlined in his Paris letter, Senator Sherman, during the second session of the Fortieth Congress, introduced Senate bill 217, entitled, "A bill in relation to coinage of gold and silver."
The material parts of this proposed measure are contained in sections one, two, and three, which are as follows: -
"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, with a view to promote a uniform currency among the nations, the weight of the gold coin of five dollars shall be 124 8/20 troy grains, so that it shall agree with a French coin of twenty-five francs, and with the rate of thirty-one hundred francs to the kilogram;
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and the other sizes or denominations shall be in due proportion of weight, and the fineness shall bc nine-tenths or 9oo parts fine in 1,ooo.
"Section 2. And be it further enacted, That, in order to conform the silver coinage to this rate and to the French valuation, the weight of the half dollar shall be 179 grains, equivalent to ll6 decigrams; and the lesser coins be in due proportion, and the fineness shall be nine-tenths. But the coinage of silver pieces of one dollar, five cents, and three cents shall be discontinued.
"Section 3. And be it further enacted, That the gold coins to be issued under this act shall be a legal tender in all payments to any amount; and the silver coins shall be a legal tender to an amount not exceeding ten dollars in any one payment."
The language of these sections expressly demonetizes the standard silver dollar of 412 1/2grains as the unit of account by omitting to provide for its coinage.
The only silver coins that could be issued from the mints of the United States, should this bill become a 1aw, would be the half dollar, the quarter dollar, and tan cent piece, which would be legal tender for the payment of debts to any amount not exceeding ten dollars in any one payment; while gold coin would be unlimited legal tender to any amount.
The bill was referred to the Finance Committee, of which Mr. Sherman was Chairman, and on the 9th of June, 1868, he reported it back favorably, and he advocated its passage in an elaborately written argument.
He thus spoke of the system of coinage which the bill proposed to establish as follows: -
"The second inquiry of your committee was whether the plan proposed by the Paris conference was the best mode to accomplish the end desired.
It proposes: -
1. A single standard exclusively of gold.
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2. Coins of equal weight and diameter.
3.Of equal quality of fineness - nine-tenths fine.
4. The weight of the present s-franc gold piece to be the unit.
5. The coins of each nation to bear the names and emblems prepared by each, but to be legal tenders public and private in all.
"The single standard of gold1 is an American idea, yielded reluctantly by France and other countries, where silver is the chief standard of value. The impossible attempt to maintain two standards of value has given rise to nearly all the debasement of coinage of the last two centuries. The relative market value of silver and gold varied like other commodities, and this led first to the demonetization of the more valuable metal, and second to the debasement or diminution of the
quantity of that metal in a given coin."
This was the first effort ever attempted to fasten a single gold standard upon the American people, and the declaration of Senator Sherman that, "The single standard of gold is an American idea," was misleading, as he well knew at the time when he use a this language in the report quoted.
The sing1e gold standard is of British origin, as the parliamentary acts of 1816 and 1844 conclusively prove beyond any doubt whatever.
Mr. Sherman also used the following language in that rcport: -
"France, whose standard is adopted, makes a new coin similar to our half eagle. She yields to our demand for the sole standard of gold, and during the whole conference evinced the most earnest wish to secure the co-operation of the United States in the great object of unification of coinage."
The rcport above quoted is proof positive, that Senator Sherman and Mr. Ruggles had placed the United States in a false light before the Paris conference.
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The distinguished Senator avers that France yielded to "Our demand for the sole standard of gold" - an astonishing piece of intelligence to his colleagues.
For, be it remembered, Mr. Ruggles was a mere appointee of the President, and Congress had not, either by bill or resolution, authorized Mr. Ruggles to represent the United States at any monetary conference whatever.
The attitude of Mr. Ruggles on the proposed change of the coinage laws of the United States was purely voluntary, and, in fact, the views of this gentleman and Senator Sherman were distinctly repudiated by Congress at its earliest opportunity.
The same committee, by Senator Morgan, of New York, submitted a minority report against the passage of the bill. Wc quote at length from this powerful document: -
"In June last, while the Universal Exposition was in progress, an international monetary conference washeld in Paris under the presidency of the French minister of foreign affairs.
"Delegates from the several European nations were present.
"Mr. Samuel B. Rugglcs represented the United States, and his report on the subject has been communicated to Congress through the Department of State. From this it appears that a plan of monetary unification was there agreed upon, the general features of which are:
"1. A single standard, exclusively of gold.
"2. Coins of equal weight and diameter.
"3. Of equal quality, nine-tenths fine.
"4. The weight of the present 5-franc gold piece to the unit, with its multiples. The issue by France of a new coin of value and weight of 25 francs was recommended.
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"5. The coins of each nation to continue to bear the names and emblems preferred by each, but to be legal tenders, public and private, in all.
"Senate bill 217 is designed to carry into effect this plan. Its passage would reduce the weight of our gold coin of $5, so as to agree with a French coin of 25 francs.
"It determines that other sizes and denominations shall be in clue proportion of weight and fineness, and that foreign gold coin, conformed to this basis, shall be a legal tender so long as the standard of weight and fineness are maintained. It requires that the value of gold coin shall be stated both in dollars and francs, and also in British terms, whenever Great Britain shall conform the pound sterling to the piece of $5.
"It conforms our silver coinage to the French valuation, and discontinues the silver pieces of $1,5, and 3 cents, and limits silver as a legal tender to payments of $10. The 1st of January, 1869, is fixed as the period for the act to take effect.
"The reduction which this measure would effect in the present legal standard value of the gold coin of the United States would be at the rate of three and a half dollars to the hundred, and the reduction in the legal value of our silver coinage would be still more considerable.
"A change in our national coinage so grave as that proposed by the bill should be made only after the most mature deliberation. The circulating medium is a matter that directly concerns the affairs of everyday life, affecting not only the varied, intricate and multiform interests of the people at home, to the minutest detail, but the relations of the nation with all other countries as well. The United States has a peculiar interest in such a. question. It is a principal producer of the precious metals, and its geographical position, most favorable in view of impending commercial changes, renders it wise that we should be in no haste to fetter ourselves by any new international
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regulation based on an order of things belonging essentially to the past."
Further on in his report, the distinguished Senator, with rare power of fact and argument, exposes this new scheme of finance proposed to be fastened upon the American people by the bill introduce by Sherman.
He shows that the American continent produced four-fifths of the silver of commerce; that the mines of Nevada have taken high rank; and that Mexico alone supplied more than half of the world's grand total.
He points out that silver money is the key to the commerce of the western hemisphere, and of the trade of Chins, Japan, India, and other Oriental countries.
The Senator says: -
"The American continent, too, produces four-fifths of the silver of commerce. The mines of Nevada have already taken high rank, and Mexico alone supplies more than half the world's grand total. Our relations with the silver-producing people, geographically most favorable, are otherwise intimate.
"Manifestly our business intercourse with them can be largely increased, a fact especially true of Mexico, which, for well-known political reasons seeks the friendliest understanding. This must not bc overlooked.
"These two streams of the precious metals, poured into the current of commerce in full volume, will produce perturbations marked and important. Other countries will be affected, but the United States will feel the effect first and more directly than any other.
"The Pacific railway will open to us the trade of China, Japan, India, and other Oriental countries, of whose prepossessions wc must not lose sight. For years silver, for reasons not fully understood, has been the object of unusual demand among these Asiatic nations, and now forms the almost universal medium
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of circulation, absorbing rapidly the silver of coinage. The erroneous proportion fixed between silver and gold by Prance, and which we are asked to copy, is denuding that country of the former metal. Our own monetary system, though less faulty, is not suitably adjusted in this respect. The silver dollar, for instance, a favorite coin of the native Indian and distant Asiatic, has well-nigh disappeared from domestic circulation, to reappear among the eastern peoples, with whom we more than ever seek close intimacy.
"As they prefer this piece we do well to increase rather than discontinue its coinage, for we must not deprive ourselves of the advantages which its agency wil1 afford, and 'it would be useless to send dollars to Asia inferior in weight and value to its well-known Spanish and American prototype.' "
Mr. Ruggles says that nearly all the silver coined in the United States prior to 1858 has disappeared. A remedy is not to be found in the adoption of a system that undervalues this metal, for that commodity, like any other, shuns the market where not taken at its full value to find the more favorable one.
It is a favorite metal, entering into all transactions of daily life, and deserves proper recognition in the monetary system.
"It is said that 'To promote the intercourse of nations with each other, uniformity in weights, coins, and measures of capacity is among the most efficacious agencies.' Our weights, coins, and measures now correspond much more nearly to the English than to the French standard. Our commerce with Great Britain is nine times greater than with France, and if the former does not adopt the Paris system of coinage - and we have no assurance that she will - the United States would certainly commit a serious error in passing this bill. No argument is needed to enforce this. And what of the rising communities? A properly adjusted coinage would stimulate commerce with those great parts of the continent lying south end southwest
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of us, with the West Indies and the countless millions of trans-Pacific countries. We stand midway on the thoroughfare of traffic between these two widely-separatcd races. Our railways, canals, our natural highways and merchant marine may be made to control their carrying trade.
"But here, as everywhere else, a well-adjusted coinage becomes a wand of power in the hand of enterprise. Tokens are not wanting to mark the favor in which the United States are held by China. The unusual honor recently conferred by that government upon a citizen of this country was not alone because of his fitness as an ambassador at large, but was a mark as well of a friendly disposition toward this country. Future harmony of intercourse is assured, too, by their adoption as a textbook in diplomatic correspondence of a leading American authority on international law. Much might also be said about the growing partiality of Japan towards this country, but it is enough that the recent opening of certain ports indicates an enlightened change in the politics of these two old empires, of which commerce, especially our own, is availing itself."
This patriotic document pilloried the rascality of that scheme, which would destroy the immense mineral wealth of the western hemisphere by the destruction of silver money.
Further on in the same report, Senator Morgan exposes the fallacy of this so-called international system of coinage embodied in the Sherman bill. The genuine Americanism of his nature is finely illustrated by the concluding language of that celebrated report.
He continues: -
"Oar coinage is believed to be the simplest of any in circulation, and every way satisfactory for purposes of domestic commerce; it possesses special merits of every-day value, and should not, for light reasons, be
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exchanged where the advantages sought to be gained are mainly theoretical, engaging more properly the attention of the philosopher than the practical man. The instincts of our people lead them to believe that we are on the eve of important business changes, and we may therefore safely hold fast for the present to what experience has proven to be good, following only where clear indications may lead, and a future of great prosperity opens to our country.
"The war gave us self-assertion of character, and removed many impediments to progress; it also proved our ability to originate means to ends. Its expensive lesson will be measurably lost if it fails to impress upon us the fact that we have a distinctive American policy to work out, one sufficiently free from the traditions of Europe to be suited to our peculiar situation and the genius of our enterprising countrymen.
"The people of the United States have been quick to avail themselves of their natural advantages. Not only the public lands and the mines of precious metals, but our political institutions, have likewise powerfully operated in our favor, and will continue to do so with increasing force." - (Senate Report, Com, No. ll7, 40th Congress, 2d Sess., Page 13.)
Judging from the language of the report just quoted, the great Senator from the Empire state was a firm believer in the power of the American people to legislate upon domestic financial questions without the aid or consent of foreign powers and potentates.
Were he alive at the present day, how his indignation would be aroused at the successive journeyings to England by American monetary commissioners, who have humiliated our national self-respect by getting down on their knees before the "Old Lady of Thread Needle Street," London, and begging for her assistance in the solution of our financial problems.
The report of Senator Morgan was the death knell of
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the bill, and no attempt was made to bring it up again while Mr. Morgan was a member of the Senate.
After the retirement of Mr. Morgan from the United States Senate, March 4, 1869, a revision of the mint laws was undertaken.
Mr. Boutwell, Secretary of the Treasury, John J. Knox, Deputy Comptroller of the Currency, and Mr. Linderman, Director of the mint, all of whom were devoted adherents of the nationa1 banking system, and a single standard of gold, framed a bill containing seventy-one sections, the object of which was ostensibly a revision of the mint laws of the United States.
On April 25, 1870, this bill, prepared by the Treasury clique, was transmitted by Secretary Boutwell to John Sherman, chairman of the Finance Committee, with a recommendation that it be adopted by Congress.
Nowhere in the report of Secretary Boutwell, which accompanied this bill, was any mention made of any change in the system of coinage, but he called it, "A bill revising the laws relative to the mint, assay office, and coinage of the United States."
This proposed measure, which purported to be a mere codification of the mint laws, in reality provided for the demonetization of the silver dollar.
On the 28th of April, 1870, the bill was introduced into the United States Senate by Mr. Sherman, and was referred to the Committee en Finance.
On December 19, 1870, it was reported back to the Senate with amendments.
On January 9,1871, the bill came up in the Senate and was discussed in Committee of the Whole.
That the reader may understand the process by which legislation can be surreptitiously pushed
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through Congress, it must be borne in mind that the various committees of the Senate and House of Representatives have immense power to control the passage of laws.
A measure is introduced into either branch of Congress, it is referred to the appropriate committee which takes charge of the bill, considers it in all its phases, and makes a report for or against its passage. The rcport of the committee, in a majority of cases, is the foundation of the action of that branch where it was originally proposed.
Therefore, it is the various committees of Congress which exert a powerful influence upon the fate of bills, as such reports are generally taken to be absolutely true by the members of that body.
The bill as amended passed the Senate on the 10th of January,
1871 and on the 13th of the same month it reached the House and was ordered to be printed.
On February 25, 1871, Mr. Kelley, chairman of the Committee on Coinage, reported the bill beck with an amendment, in the nature of a substitute, when it was again printed and re-committed.
The bill was never heard of at that session and it never was debated in the House for a single moment.
On March p, 1871, Mr. Kelley introduced a bill in the Forty-second Congress, when it was ordered to be printed, and referred to the Committee on Coinage when appointed.
On January 9, 1872, the bill was reported by Mr. Kelley, chairman of the Coinage Committee, with the recommendation that it pass.
In the report made by Mr. Kelley to the House, the general objects of the bill were pointed out by him.
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He informed the House that it had been prepared in the Treasury Department for the purpose of codifying and simplifying the mint laws, He stated to the House that the most important change made by the bill was that creating a Director of the mint, with headquarters in the Treasury Department. Mr. Maynard, a member of the Committee on Coinage, made the following statement of the scope of the bill; viz.: -
"This bill is symmetrical in all its parts; it is a mere revision of the mint laws, suggested by the Secretary of the Treasury, and concurred in by every man who sees the difficulty of managing mints and assay offices, scattered over this country as they are, without having a responsible head. Its sole function is to so codify the laws, and to appoint a responsible head under the Secretary of the Treasury."
On the 10th of January, 1872, the House resumed consideration of the bill, and it was finally re-committed to the Committee on Coinage, Weights, and Measures for a report. The committee reported the bill to the House on April 9, 1872.
Mr. Hooper, of Massachusetts, who was in charge of the bill, made a lengthy explanation of its provisions, and the only allusion made by him with reference to the silver dollar is the following; viz.: -
"Section 16 re-enacts the provisions of existing laws defining the silver coins and their weights, respectively, except in relation to the silver dollar, which is reduced in weight from 412 1/2 to 384 grains; thus mating it a subsidiary coin in harmony with the silver coins of less "denomination, to secure its current circulation with them. The silver dollar of 4121/2 grains, by reason of its bullion and intrinsic value being greater than its nominal value, long since ceased to be a coin of circulation, and is melted by manufacturers of silverware. It docs not circulate now in commercial transactions
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with any country, and the convenience of thosc manufacturers in this respect can better be met by supplying small stamped bars of the same standard, avoiding the useless expense of coining the dollar for that purpose. The coinage of the half dime is discontinued, for the reason that its place is supplied by the copper-nickel g-cent piece, of which a large issue has been made, and which, by the provisions of the act authorizing its issue, is redeemable in United States currency." - (See Cong. Globe, Part 3, Page, 2,306 2d Sess., 42d Congress.)
Mr. Hooper correctly stated the weight and fineness of the dollar contained in the bill pending, and as it finally passed the House, but he does not state that it was a legal tender for only five dollars. From the tenor of his remarks and the character of his argument, it could have been justly inferred that the purpose of this bill was to reduce the weight of the silver dollar so that it would circulate on a parity with that of gold, as at this time the value of the silver dollar exceeded that of gold by a fraction over three per cent.
During the debate on the bill, Hon. Clarkson N. Potter, member of Congress from New York, opposed its passage in a speech of great length.
The speech of Mr. Potter excited a very warm controversy, and those who were urging the passage of the bill, seeing the determined and aggressive opposition brought to bear against it, professedly abandoned it, end brought in a substitute which they asserted was entirely free from the objections brought against the original measure.
On the 27th of May, 1872, Mr. Hooper obtained the floor and made a statement as follows; viz.: -
"I desire to callup the bill (H. R., No. 1,427) revising and amending the laws relative to mints, assay
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offices, and coinage of the United States. I do so for the purpose of offering an amendment to the bill in the nature of a substitute, one which has been very carefully prepared, and which I have submitted to the different, gentlemen in this House who have taken a special interest in the bill. I find that it meets with universal approbation in the form in which I offer it. I move that the rules bc suspended and that the substitute be put on its passage."
Mr. Brooks: I ask the gentleman from Massachusetts [Mr. Hooper] to postpone his motion until his colleague on the committee, my colleague from New York Mr. Potter] is in his seat.
Mr. Hooper, of Massachusetts: It is so late in the session that I must decline waiting any longer.
Mr. Brooks: I would again suggest to the gentleman that he should wait until my colleague comes in.
Mr. Hooper, of Massachusetts: I cannot do so.
Mr. Holman: I suppose that it is intended to have the bill read before it is, put on its passage.
The Speaker: The Substitute will be read.
Mr. Hooper, of Massachusetts: I hope not. It is a long bill, and those who are interested in it are perfectly familiar with its provisions.
Mr. Kerr: The rules can not be suspended so as to dispense with the rending of the bill?
The Speaker: They can be.
Mr. Kerr: I want the House to understand that it is attempted to put through this bi1l without being read.
The Speaker: Does the gentleman from Massachusetts [Mr. Hooper] move that the reading of the bill be dispensed with?
Mr. Hooper of Massachusetts: I will so frame my motion to suspend the rules that it will dispense with the reading of the bill.
The Speaker: The gentleman from Massachusetts moves that the rules be suspended and that the bill pass, the reading thereof being dispensed with.
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Mr. Randall: Can not we have a division of that motion?
The Speaker: A motion to suspend the rules cannot be divided.
Mr. Randall: I should like to have the bill read, although I am willing that the rules shall be suspended as to the passage of the bill.
The question was put on suspending the rules and passing the bill without reading; and (two-thirds not voting in favor thereof) the rules werc not suspended.
The Congressional Record from which he have quoted is proof that it was a cunning move on the part of Mr. Hoopcr to push a measure through the House during the closing hours of its session, and that he sought to do this during the temporary absence of those members who were aware of his plan, and who were opposed to the consummation of the scheme. This unscrupulous tool of the money power did not even want this bill read so that its contents would become known, as that would defeat its passage.
In this dilemma, Mr. Speaker Blaine came to the rescue of Mr. Hooper, and suggested to the latter that he move the suspension of the rules, so that the bill could be passed without reading.
The suggestion of Speaker Blaine was promptly acted on by Mr. Hooper, but the motion to suspend the rules and pass the bill without reading failed for want of a two-thirds vote.
Mr. Hooper thereupon moved that the substitute be read, that the rules be suspended and the bill passed, which action had been prompted by Speaker Blaine.
We give the proceedings of the House verbatim; viz.;
Mr. Hooper, of Massachusetts: I now move that the rules be suspended, and the substitute for the bill
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in relation to mints and coinage passed; and I ask that the substitute be read.
The clerk began to read the substitute.
Mr. Brooks: Is that the original bill?
The Speaker: The motion of the gentleman from Massachusetts [Mr. Hooper] applies to the substitute, and that on which the House is called to act is being read.
Mr. Brooks: As there is to be no debate, the only chance we have to know what we are doing is to have both the bill and the substitute read.
The Speaker: The motion of the gentleman from Massachusetts being to suspend the rules and pass the substitute, it gives no choice between the two bills. The House must either pass the substitute or none.
Mr. Brooks: How can we choose between the original bill and the substitute unless we hear them both read?
The Speaker: The gentleman can vote "aye" or "no" on this question. Whether this substitute shall be passed.
Mr. Brooks: I am very much in the habit of voting "no" when I do not know what is going on.
Mr. Holman: Before the question is taken up on suspending the rules and passing the, bill, I hope the gentleman from Massachusetts will explain the leading changes made by this bill in the existing law, especially in reference to the coinage. It would seem that all the small coinage of the country is intended to be recoined.
Mr. Hooper, of Massachusetts: This bill makes no changes in the existing law in that regard. It does not require the recoinage of the small coins." - (Cong. Globe, Part 5, Page 3,883, 2d Sess., 42d Congress.)
The question being taken upon the motion of Mr. Hooper, the rules were suspended by an aye and nay vote and the bill passed.
The scheme was forced through the House by the
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downright falsehoods of Samuel Hooper, a banker of Boston, aided by the trickery and the manipulation of parliamentary rules by Mr. Speaker Blaine.
The facts in the case were, that the provisions of the original bill abandoned by Mr. Hooper, and those of the substitute afterward passed, were practically the same.
The bill was now transmitted to the Senate where it went into the hands of the Finance Committee, which, on December 16, 1872, reported the bill back with amendments.
On January 7, 1873, additional amendments were reported which were ordered to be printed with the bill.
Section 16 of the substitute passed by the House was in the following language, viz.: -
"That the silver coins of the United States shall be a dollar, a half dollar or 50-cent piece, a quarter dollar or 25-cent piece, and a dime or 10-cent piece; and the freight of the dollar shall bc 384 grains; the half dollar, quarter dollar, and the dime shall bc, respectively, one-half, one-quarter and one-tenth of the weight of said dollar, which coins shall be a legal tender, at their nominal value, for any amount not exceeding five dollars in any one payment."
This section of the substitute was identical with that of the original bill which was withdrawn by Mr. Hooper; and it will be seen that silver was demonetized by its provisions, by which the free and unlimited coinage thereof was taken array from that metal, and its legal tender debt paying power limited to the insignificant sum of five dollars for any one payment.
Section 15 of the substitute passed by the House was stricken out by the Finance Committee of the Senate
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in the way of amendment. When the question on the amendment striking out section r g was before the Senate it was agreed to by that body. The next amendment was to strike out the word seventeen in the 17th section of the substitute, and this amendment made section 17 of the substitute, read 16 of the bill as amended by the Senate.
The number of each succeeding section was changed accordingly.
The several sections of the substitute were taken up in their changed numeral order until section 19 of the substitute as passed by the House was reached, which, by the striking out of section 15 of said substitute, became section 18 of the amended Senate bill.
This latter section provided for the inscription and mottoes to be impressed upon the coins to be issued under this bill.
A debate arose upon this question, and Senator Casserly, of California, called attention to the omission of the eagle upon the gold dollar, three dollar gold piece, the silver dollar, half dollar and quarter dollar.
Senator Sherman gave the following explanation;
Viz.:-
Mr. Sherman: "If the Senator will allow me, he will see that the preceding section provides for coin which is exactly interchangeable with the English shilling and the 5-franc piece of France; that is, a 5-franc piece of Franco will be the exact equivalent of a dollar of the United States in our silver coinage; and in order to show this wherever our silver coin shall float-and we are providing that it shall float all over the world- we propose to stamp upon it, instead of our eagle, which foreigners may not understand, and which they may not distinguish from a buzzard or some other bird, the intrinsic fineness and weight of the coin." - (Cong.
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Globe, Part I, Page 672, 3d Sess., 42d Congress, 1872-73.)
This public declaration of Senator Sherman, in reply to the question of Senator Casserly, is one of the mysteries of this transaction. He had charge of this bill, and the Congressional Globe shows that what afterward became section 15 of the bill as amended by the Senate was never read nor acted upon by that body.
The French 5-franc piece, about which Mr. Sherman spoke in his reply to Senator Casserly, was the equivalent of a silver dollar containing 384 grains of silver, mentioned in section 16 of the substitute, now section 15 of the amended bill before the Senate.
In 1874, upon the discovery of the demonetization of silver, said section 15 of the amended Senate bill, which was now the lair, was ascertained to read as follows: -
"The silver coins of the United States shall be a trade dollar, a half dollar, or 50-cent piece, a quarter dollar, or 25-cent piece, a dime, or 10-cent piece; and the weight of the trade dollar shall be 420 grains troy; the weight of the half dollar shall be 12 grams and one-half of a gram; the quarter dollar and the dime shall be, respectively, one-half and one-fifth of the freight of said half dollar; and said coins shall be a legal tender at their nominal value for any amount not exceeding five dollars in any one payment."
That this section of the coinage law, providing for the mintage of a trade dollar containing 420 grains of silver, was not in the bill when the debate arose upon the inscriptions and mottoes designed to be placed upon the coins provided for by this act, is evident from the answer made by Sherman to the inquiry of Mr. Casserly; for the reason that the debate arose over section 18 of the amended bill, while the provi-
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sion for the coinage of silver was embraced in the preceding section 15 of the amended act. Said section 15 was formerly 16 of Mr. Hooper's substitute.
The parliamentary procedure in the consideration of bills in both Houses of Congress is to read each section separately, take a vote upon its passage, and thus act upon each section consecutively.
The bill so amended went to the House of Representatives for its concurrence in the Senate amendments.
Speaker Blaine appointed Messrs. Hooper and Stoughton as the Committee of Conference on the part of the House; Senators Sherman, Scott, and Bayard, three of the most radical single gold standard men in Congress, were appointed conferees on the part of the Senate.
The Conference Committees met, and, with the exception of a few trifling amendments, agreed to the provisions of the bill as it came from the Senate. They made their reports to their respective Houses, and the bill became a law on the 12th of February, 1873.
We now come to a singular act on the part of Sherman when the bill came up for final passage in the Senate.
During his career as chairman of the Finance Committee of the Senate, wc have seen him in the city of London, in 1867, next he appears at Paris in the same year, and throws his influence in behalf of the single standard of gold, then he introduces a bill in Congress in 1868 for the demonetization of silver. Afterward, during the year 1870, he brings forward the bill framed by Secretary Boutwell, of which mention has been made heretofore. He reports bill after bill for the adoption
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of a single standard of gold, and now he votes against the act of February 12, 1873, which was finally the fruition of his efforts.
This incomprehensible action is the strangest episode in the long public career of the Great Demonetizer, and many explanations have been volunteered for this apparently inconsistent conduct.
In a speech in the United States Senate, Mr. Sherman attempted the following explanation of his coarse which led to the demonetization of the silver dollar, he says: -
"The old silver dollar was dropped out, in the revision, and why? Simply because it was not in use. No law repealed the silver dollar; it was simply dropped out - there was no such coin in use. It could not circulate because, in 1872 and 1873, the silver dollar was worth more than the gold dollar. As it had not been coined for twenty years it was dropped out from among the coins of the United States."
With his consistent and usual disregard of facts, Senator Sherman avers that no silver dollars had been coined for the period of twenty years prior to the demonetization act of February 12, 1873. This statement was made in the face of the official report of the director of the United States mint for the year 1873, in which it is shown that 1,ll7,136 standard silver dollars were coined in the calendar year of 1871, that 1,ll8,600 were coined in the year 1872, and in the one month and twelve days from January 1, 1873, to February 12, 1873,296,000 of standard silver dollars were coined.
The excuse tendered by Mr. Sherman for the passage of the act of February 12, 1873, is that the silver dollar was worth more than the gold dollar. The si1-
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ver dollar so "dropped out" contained 412 1/2 grains of silver. Now, if the reasons stated by Mr. Sherman for the omission of the coinage of the silver dollar by that act were valid and controlled his action, why did the honorable Senator amend that act in committee by increasing the number of grains in the silver dollar to 420, thus making its bullion value greater than before the passage of this act?
His strange logic is as follows: First, prior to its demonetization, the silver dollar was more valuable than that of gold, hence it would not circulate; therefore, as a remedy to increase its circulation, the value of the bullion in the silver dollar must be made greater.
In other words, the silver dollar was worth three and one-fourth cents more than that of gold and the former was hoarded or sold abroad; therefore, to obviate this difficulty in the way of increasing the circulation of that dollar, the weight was increased from 4l2 1/2 to 420 grains, and its overvaluation from three and one-fourth cents to five cents.
With such sophistry as the above, Mr. Sherman sought to delude the American people.
The manner in which the act of February 12 1873, was slipped through both Houses of Congress has excited endless controversies which rage even to this day.
Senator Sherman, in his speech of August 30, 1893, made a labored defense of his conduct during the passage of the bill demonetizing silver. He asserts that the measure was fully and thoroughly debated, but the Congressional Globe of that period conclusively proves that such was not the fact.
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On the other hand, many Senators and Representatives of long service in Congress, including the sessions of 1870-71-72-73, renowned for their ability and integrity, have declared time and again that false statements were made by those having charge of the bill, that these statements were relied on by the various members, and that those who voted for the measure never knew or even suspected that silver would bc demonetized by its passage.
The public men making these statements bear such high reputation for truth and integrity, that their testimony does not require the sanction of an oath to carry conviction.
One exceedingly strong circumstance that adds great weight to the charge of fraud in the passage of the act of February 12, 1873, lies in the fact that Senators Nye and Stewart, who represented the state of Nevada - the greatest silver producing territory in America - voted in favor of the bill.
Will any sane person suppose that these two Senators would knowingly vote for a measure which would ruin the immensely rich silver mines of that state that had honored then by an election to the United States Senators
It is preposterous.
The following statements of leading members of Congress furnish a solution to this memorable controversy.
Mr. Holman, in a speech delivered in the House of Representatives July 13, 1876 said, with reference to the act of February in, 1873: -
"I have before me the record of the proceedings of this House on the passage of that measure, a record
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which no man can read without being convinced that the measure and the method of its passage through this House was a 'colossal swindle.' I assert that the measure never had the sanction of this House, and it does not possess the moral force of law." - (Cong. Record, Vol. IV, Part 6, Appendix, Page 193, 1st Sess., 44th Congress.)
This is the statement of a man renowned as the "Watch Dog of the Treasury," and whose vigilance during his long career in Congress has saved the nation hundreds of millions of dollars.
Mr. Birchard, a republican member of Congress from Illinois, in a speech in the House on July 13, 1876, said: -
"The coinage act of 1873, unaccompanied by any written report upon the subject from any committee, and unknown to the members of Congress, who without opposition allowed it to pass under the belief, if not assurance, that it made no alteration in the value of the current coins, changed the unit of value from silver to gold." - (Same Cong. Record, Page 4,560.)
Mr. Cannon, a republican member of Congress from the same state, in a speech on July 13, 1876, said: -
"This legislation was had in the Forty-second Congress, February 12, 1873, lay a bill to regulate the mints of the United States, and practically abolish silver as money by failing to provide for the coinage of the silver dollar. It was not discussed, as shown by the Record, and neither members of Congress nor the people understood the scope of the legislation." - (Same Cong. Record, Appendix, Page 197.)
Again on August 5, 1876, Mr. Holman in speaking of that bill said: -
"The original bill was simply a bill to organize a Bureau of mines and coinage. The bill which finally
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passed the House and which ultimately became a law was certainly not read in this Housc."
On the same day in the course of the same speech he said: -
"It was never considered before the House as it was passed. Up to the time the bill came before this House for final passage the measure had singly been one to establish a bureau of mines; I believe I use the term correctly now. It came from the Committee on Coinage, Weights, and Measures. The substitute which finally became a law was never read, and is subject to the charge made against it by the gentleman from Missouri [Mr. Bland], that it was passed by the House without a knowledge of its provisions, especially upon that of coinage.
"I myself asked the question of Mr. Hooper, who stood near where I am now standing, whether it changed the law in regard to coinage. And the answer of Mr. Hoopcr certainly left the impression upon the whole House that the subject of coinage was not affected by that bill." - (Cong. Record, Vol. IV, part 6, Page 5,237, 1st Sess., 44th Congress.)
Mr. Bright, of Tennessee, said of this law: -
"It passed by fraud in the House, never having been printed in advance, being a substitute for the printed bill; never having been read at the Clerk's desk, the reading having been dispensed with by an impression that the bill made no material alteration in the coinage laws; it was passed without discussion, debate being cut off by operation of the previous question. It was passed to my certain information, under such circumstances that the fraud escaped the attention of some of the most watchful as well as the ablest statesmen in Congress at that time.... Aye, sir, it was a fraud that smells to heaven. It was a fraud that will stink in the nose of posterity, and for which some persons must give account in the day of retribution," - (Cong. Record, Vol. VII, Part 1, Page 584, 2d Sess. 45th Congress.)
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Senator Allison, on February 15, 1878, when House bill 1,093, to authorize the free coinage of the standard silver dollar, and to restore its legal tender character was under consideration, stated:
"But when the secrct history of this bill of 1873 comes to be told, it will disclose the fact that the House of Representatives intended to coin both gold and silver, and intended to place both metals upon the French relation instead of on our own, which was the true scientific position wit)i reference to this subject in
1873, but that the bill afterward was doctored, if I may use that term, and I use it in no offensive sense of course -"
Mr. Sargent interrupted him and asked him what he meant by the word "doctored."
Mr. Allison said: -
"I said I used the word in no offensive sense. It was changed after discussion, and the dollar of 420 grains was substituted for it." - (Cong. Record, Vol. VII, Part 2, Page 1,058, 2d Sess. 45th Congress.)
Genera1 Garfield, in a speech made at Springfield, Ohio, during the fall of 1877,said: -
"Perhaps I ought to be ashamed to say so, but it is the truth to say that, I at that time being Chairman of the Committee on Appropriations, and having my hands overfull during all that time with work, I never read the bill. I took it upon the faith of a preeminent democrat and a prominent republican, and I do not know that I voted at all. There was no call of the yeas and nays, and nobody opposed that bill that I know of. It was put through as dozens of bills are, as my friend and I know, in Congress, an the faith of the report of the chairman of the committee; therefore I tell you, because it is the truth, that I have no knowledge about it." - (Cong. Record, Vol. VII, Part 1,Page 989, 2d Sess., 45th Congress.)
Senator Howe, in a speech delivered in the Senate on February 5, 1878, said: -
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"Mr. President, I do not regard the demonetization of silver as an attempt to wrench from the people more than they agree to pay. That is not the crime of which I accuse the act of 1873. I charge it with guilt compared with which the robbery of two hundred millions is venial."- (Cong. Record, Vol. VII, Part 1, Page 754, 2d Sess., 45th Congress)
Senator Thurman, on the 15th of February, 1878, in debate said: -
"I can not say what took place in the House, but know when the bill was pending in the Senate we thought it was simply a bill to reform the mint, regulate coinage, and fix up one thing and another, and there is not a single man in the Senate, I think, unless a member of the committee from which the bill came, who had the slightest idea that it was even a squint toward demonetization." - (Cong. Record, Vol. VII, Part 2, Page 1,064 2d Sess., 45th Congress.)
Mr. Kelley, a republican member of Congress from Pennsylvania, in a speech delivered in the House in 1879, in speaking of the act of February 12,1873, said: -
"All I can say is that the Committee on Coinage, Weights, and Measures, who reported the original bill, were faithful and able, and scanned its provisions closely; that as their organ I reported it; that it contained provision for both the standard silver dollar and the trade dollar. Never having heard until a long time after its enactment into law of the substitution in the Senate of the section which dropped the standard dollar, I profess to know nothing of its history; but I am prepared to say that in all the legislation of this country there is no mystery equal to the demonetization of the standard silver dollar of the United States. I have never found a man who could tell just how it came about or why." - (Cong. Record, Vol. IX, Part 1, Page 1,231, 1st Sess., 46th Congress,)
President Grant was also ignorant of the demonetiza-
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tion of silver. Eight months after the passage of the bill, he wrote a letter to Mr. Cowdrey, from which the following extract is taken: -
"The panic has brought greenbacks about to a par with silver. I wonder that silver is not already coming into the market to supply the deficiency in the circulating medium. When it does come, and I predict that it will soon, we will have made a rapid stride toward specie payments. Currency will never go below silver after that. The circulation of silver will have other beneficial effects. Experience has proved that it takes about forty millions of fractional currency to make small change necessary for the transaction of the business of the country. Silver will gradually take the place of this currency, and, further, will become the standard of values which will be hoarded in a small way. I estimate that this will consume from two to three hundred millions, in time, of this species of our circulating medium.
"It will leave the paper currency free to perform the legitimate functions of trade and will tend to bring us back where we must come at last, to a specie basis. I confess to a desire to see a limited hoarding of money. It insures a firm foundation in time of need. But I want to see the hoarding of something that has a standard of value the world over. Silver has this, and if we once get back to that our strides toward a higher appreciation of our currency will be rapid. Our mines are now producing almost unlimited amounts of silver, and it is becoming a question, 'What shall we do with it?' I suggest herc a solution that will answer for some years, and suggest to you bankers whether you may not imitate it: To put it in circulation noir; keep it there until it is axed, and then we will find other markets."- (McPherson's Hand Book of Politics for 1874, Pages 134-135.)
It has been charged time and again, that Ernest Seyd, the emissary of the London money power, was
10
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in this country at the time of the demonetization of silver, and that he used the vast sum of $5oo,ooo with which to corrupt Congress and to secure its demonetization.
On the 3oth of August, 1893, Senator Sherman, in a speech urging the repeal of the purchasing clause of the Sherman Law of July 14, 1890, took occasion to severely denounce the charge as utterly false.
But as evidence that some mysterious influence was brought to bear upon certain members of Congress, wc produce the following language taken from the report upon the bill which demonetized silver. This report was written by Mr. Hooper who was in charge of that bill, and who was so persistent in engineering its passage through the Forty-Second Congress That rcport contains the following statement; via: -
"The bill was prepared two years ago, and has been submitted to careful and deliberate examination. It has the approval of nearly all the mint experts of the country and the sanction of the Secretary of the Treasury. Ernest Seyd, of London, a distinguished writer and bullionist, is now here, and has given great attention to the subject of mints and coinage, and after examining the first draft of the bill made various sensible suggestions, which the committee accepted and embodied in the bill. While the committee take no credit to themselves for the original preparation of this bill, they have no hesitation in unanimously recommending its passage as necessary and expedient."
Here is a direct admission that Ernest Seyd, a citizen of England, was in this country at the time that the first steps were taken in the drafting of that bill which aimed at the striking down of the time-honored silver dollar, and the passage of which meant the destruction of the valuable silver mines of the United
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States, together with those of Mexico and South America.
Mr. Seyd was not here merely as a spectator, as the language of Mr. Hooper shows, for he says that this Englishman, "After examining the first draft of the bill made various sensible suggestions, which the committee accepted and embodied in the bill."
It will strike the average American citizen as singular that public men of the prominence of Samuel Hooper and John Sherman, members of the National Congress, should submit a great measure of such importance as this bill to the inspection and for the correction of its provisions by an alien who owed allegiance to Great Britain.
It is a remarkable coincidence that foreign nations, especially England, should exert such influence in the preparation and enactment of financial measures that came solely within the constitutional powers of an American Congress.
These striking coincidences of the constant meetings and consultations of Senator Sherman with the financiers of Great Britain, from the time of his visit to London, in 1867, down to the passage of that infamous act demonetizing silver, werc not the results of mere accident.
It has been affirmed, time and again, by the ablest Senators and Representatives of Congress, statesmen of unblemished honor, that the demonetization of silver in 1873 was the premeditated act of the combined money power of England and America.
This charge of a deeply laid and successful conspiracy has been openly and fearlessly made in the halls of Congress, and has not been met and over-
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thrown The Congressional Records, published by authority of Congress, affords ample justification for this statement.
It is a historical fact that the financiers of Great Britain were mainly influential in procuring that great change in the coinage laws of this country, and Senator Sherman, who introduced the first bill providing for the demonetization of silver, and who ever since 1873 has exerted his immense prestige and influence against every measure providing for its restoration, in whole or in part, gives most conclusive evidence that such was the case.
To support this statement, we quote from his speech delivered before the Chamber of Commerce, of New York City, March 6, 1876, in which he made an elaborate argument against the resolution of that body in favor of repealing the Resumption Act of 1875.
In the course of his remarks, adverse to that course of the Chamber of Commerce, he said: -
"Our coinage act came into operation on the 1st of April, 1873, and constituted the gold one dollar piece the sole unit of value, while it restricted the 1egal tender of the new trade dollar and the half dollar and subdivisions to an amount not exceeding five dollars in one payment.
Thus the double standard previously existing divas finally abolished, and the United States as usual was influenced by Great Britain in making gold coin the only standard. This suits England, but does not snit us. I think with our large silver producing capacity we should return to the double standard, at least in part, and this will constitute one of the means by which we will be enabled to resume specie payments." - (Cong. Globe, Vol. IV, Part 2, Page 1,481, 1st Sess., 44th Congress.)
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Is this not a plain admission by the chairman of the Finance Committee of the United States Senate, that Great Britain had wielded a great influence in procuring the demonetization of silver in 1873?
In connection with this deliberate public admission of Senator Sherman, let it be borne in mind that Samuel Hooper stated on the floor of the House of Representatives, that a citizen of England assisted in framing the bill which demonetized silver.
This speech of Senator Sherman was clothed with official authority, and he distinctly stated that, "The double standard previously existing was finally abolished, and the United States as usual was influenced by Great Britain in making gold coin the only standard. This suits England, but does not suit us."
In his elaborate address to the leading commercial body of America, Mr. Sherman avers that British influence was successful in securing legislation from an American Congress favorable to that country, and that "This suits England but does not suit us." This is equivalent to a charge of treason against Congress and the President, and implies corruption; for what American law-maker, however base, would voluntarily prostitute his power to the influence of a foreign state?
He makes an implied charge against the patriotism of that party of which he is a leader, for it held the presidency and a great majority of both Houses of the Federal legislature at the time the act which demonetized silver was placed upon the statute books. And nowhere during the debates upon that measure does he denounce those whom he alleges voted a bill through Congress to "suit England;" nowhere had he censured those who were influenced by Great Britain. The
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query naturally presents itself - Did Great Britain influence Sherman to present the bill of June 9, 1868, which sought to demonetize silver? Was that to suit England?
Mr. Sherman knew whereof he spoke. It will be remembered that the first bill introduced in Congress to demonetize silver was that of the 9th of June, 1868, and it came fresh from the hands of Mr. Sherman.
Furthermore in his report advocating the passage of this bill, Mr. Sherman stated that "The single standard of gold is an American idea."
In his address to the Chamber of Commerce he asserts that the United States was influenced by Great Britain in adopting the single standard of gold.
No living man can reconcile the utterly inconsistent statements of this alleged statesman.
It was during this period, beginning with the year 1862 down to the year 1873, that so many gigantic scandals smirched the legislative record of Congress.
During the time covered by these years, the Federal. legislature gave away more than 2oo,ooo,ooo acres of the public domain to great railway corporations, in addition to a gratuity of United States bonds to the amount of $65,ooo,ooo; the Credit Mobilier rascality resulted from an exposure of the corruption of many distinguished members of Congress who sold thcir votes outright; the great whisky ring was all-powerful, and, in collusion with the treasury officials and revenue officers, swindled the government out of untold millions; the President, it is true, ordered Secretary Bristol "To let no guilty man escape," and then he nullified all prosecutions of the scoundrels by the
exercise of his pardoning power; Boss Shepherd reigned supreme at Wash-
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ington; the "Salary Grab" and "Back Pay" schemes of plunder were brazenly pushed through Congress, while the Freedman's Bureau robbed the negro of his savings.
It would require pages to briefly summarize the history of the congressional and departmental scandals rife at the national capital.
The Washington correspondent of that leading republican journal, the Chicago Tribune, of the date of February 21, 1873, thus described the corruption prevalent at Washington. He says: "Turkish corruption under the pashas and beys, or Russian official rottenness, could scarcely be worse than it is here."
The public conscience was so aroused by these exposures and proofs of the boundless official corruption and debauchery, that, in the congressional elections of 1874 the republican party met with an overwhelming defeat, and the democracy carried the House of Representatives by a great majority.
Immediately after the demonetization of silver by the United States, Norway, Sweden, and Denmark closed their mints to silver and adopted the gold standard.
The Latin Union, however, still continued the unlimited coinage of silver for a brief period.
On September 6, 1873, the French government limited the amount of silver to be accepted at the mints for coinage.
To afford the reader an explanation of the closing of the mints to silver by France, we refer to the great Franco-Prussian war of 1870-71, brought on by the folly of Emperor Napoleon, who, to restore his waning influence over the French nation, declared war against Prussia, July 15, 1870.
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In the brief period of two hundred and ten days, the armies of France were destroyed; her territory was over-run by the victorious Germans, and the nation lay prostrate under the heel of her bitterest enemy - Prince Bismarck
In the treaty of peace negotiated by Theirs on behalf of France, and Bismarck, on the part of Germany, the latter succeeded in imposing the most enormous burdens upon the French people.
The treaty of peace as finally agreed upon by France and Germany provided that the former should pay the latter the immense sum of 5,ooo,ooo,ooo francs ($1,ooo,-ooo,ooo), in gold as an indemnity for the expense of the war, payable in three installments, the last of which would fall due March 1, 1875.
In the meantime the French authorities were to support a German army of occupation until the money was paid.
Not satisfied with the exaction of this enormous indemnity, Bismarck compelled the French to cede to the German empire the two splendid provinces of Alsace and Lorraine.
It is said that the venerable and patriotic Theirs shed bitter tears when he signed this treaty, and that Bismarck smiled in derision at the humiliation of the Frenchman.
Up to the time of this treaty the German empire was on a silver basis, but, upon the payment of this enormous war indemnity, Bismarck, in the execution of his policy to cripple
France as much as lay in his power, procured the passage of a law through the German parliament which provided for the demonetization of silver.
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This measure became a law July 9, 1873, and it established a national gold standard throughout Germany, and it further provided that the aggregate issue of silver coin should not, until further orders, exceed ten marks ($2.50), for each inhabitant of the empire, and that the silver in excess of this amount should be withdrawn from circulation and sold.
The evident object of this measure was the enhancement of the va1ue of the vast war indemnity received from France, and, by throwing a large amount of non-legal tender silver on the market, to force down its price, which, in effect, would depreciate the silver coinage of France and the other members of the Latin union, whose mints still remained open to the free and unlimited coinage of silver at a ratio of fifteen and one-half to one.
The shrewd statesmen of France at once penetrated the scheme of the wily Bismarck to debase the French coinage, and, therefore, on the 6th of September, 1873, the French government in a treasury order limited the amount of silver to be accepted by the mints.
In February, 1874, the Latin union states jointly closed their mints to the free coinage of silver, agreeing, however, to coin on government account such quantities as were fixed upon from time to time.
Such were the reasons that moved France to suspend the unlimited coinage of silver.
During the years of 1868, 1869, 1870, 1871, 1872, and 1873, the production of silver in the United States rapidly increased, while that of gold largely diminished.
In the last named year the production of silver reached the great sum of $35,75o,ooo, to the use of which as money was destroyed by the act of February 12, 1873.
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Shortly after the demonetization of silver in the United States, a distinguished political economist of Europe urged this country to readopt the bi-metallic law, and he forcibly stated that it would, "Not only save the world at large from an abyss, and prevent the accomplishment of a stupid general crime, whose authors humanity would some day learn to curse, but that she would advance her own material interests more than may be supposed possible, and that she may perchance take the lead in the intelligent and prudent organization of firm monetary systems."
The destructive effects of the demonetizing act of 1873 upon the value of property was so great, that Hon. Alexander Stephens, one of the ablest and most conservative of American statesmen, declared that it was more disastrous to the American people than the total cost and destruction of that bloody and protracted war between the North and the South. He said: -
"A careful calculator told me the other day that shrinkage of values in this country after the fatal act was more than the whole expense of our war. That fatality was worse than war. There is no remedy for us now except in re-establishing the value of silver and its free coinage. We want $9oo,ooo,ooo in circulation, at least. We have now only fourteen dollars per capita in circulation, including all the hoarded gold and silver. We want at least twenty-five dollars per capita, or as much as we had before the crash of 1873. People fear the silver flood; I would let it come from all the world until we have a thousand millions in circulation."
The enormity of this crime, as stated by Mr. Stephens, can only be adequately gauged when it is borne in mind that the cost of the war of the Rebellion up to the time that he made that statement aggregated $8,000,000,000.
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The process by which the value of bonds and of public debts was increased by legislation, both here and in Europe, and the value of other property was correspondingly depreciated, as measured by the exchange power of money, was shown by a paper read before the Society of Arts of London, by J. Barr Robertson, the value of which was so highly recognized by the United States government, that it was published on page 354 of the coinage laws of the United States.
Mr. Robertson says: -
"While it would take too much space to enter into details regarding the practical effects of this appreciation of gold, it will suffice to give some indication of the enormous injury it has inflicted, if it is stated that the transfer of wealth from the landed and propertied classes and from the mercantile, manufacturing, and producing classes generally in the United Kingdom to the holders of securities, mortgages, annuities, etc., can not be less than L2,000,000,000, due solely to the appreciation of gold.
"It is already a question how much further the holders of securities are to receive the assistance of a continually contracting currency to enable them to go on absorbing further and further the wealth of the producing classes. If no other relief can be obtained, it may be necessary to fix a commodity standard instead of a money standard for long-dated payments, as has been recommended by the principal economists of the last hundred years. Such a colossal unearned increment as has accrued to the holders of securities valued in gold during the last twenty years in Europe and the United States, amounting to not less than from L7,000-000,000 to L9,000,000,000, is entirely unparalleled in the history of the world, and all other public questions sink into utter insignificance compared with it."
Think of it! The demonetization of silver by the United States and Europe so enhanced the exchange
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value of gold over other forms of property that it added $10,ooo,ooo,ooo to the wealth of the creditor classes of England; and from $35,ooo,ooo,ooo to $45,ooo,ooo,ooo to the accumulations of the creditor classes of Europe and the United States.
In speaking of the effects of the demonetization of silver, initiated in England by Lord Liverpool in 1815, later followed by the United States and Germany, and in describing the artificial increase of the value of money over all other species of property, and in pointing out the class who are the sole beneficiaries of that infamous system, Sir Moreton Frewen well said: -
"It may, indeed, be affirmed without fear of contradiction, the legislation arranged in the interest of a certain class, first by Lord Liverpool in this country, and again by Sir Robert Peel at the instigation of Mr. Jones Loyd and other wealthy bankers, which was supplemented recently by simultaneous anti-silver legislation in Berlin and Washington at the instance of the great financial houses. This legislation has about doubled the burden of all national debts by an artificial enhancement of the value of money.
"The fall of all prices induced by this cause has been on such a scale that while in twenty years the national debt of the United States quoted in dollars has been reduced by nearly two-thirds, yet the value of the remaining one-third, measured in wheat, in bar iron, or bales of cotton, is considerably greater, is a greater demand on the labor and industry of the nation than was the whole debt at the time it was contracted.
"The aggravation of the burdens of taxation induced by this so-called "appreciation of gold," which is no natural appreciation, but has been brought about by class legislation to increase the value of gold which is in few hands, requires but to be explained to an enfranchised democracy, which will know how to protect itself against further attempts to contract the
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currency and force down prices to the confusion of every existing contract.
"Of all classes of middle-men, bankers have been by far the most successful in intercepting and appropriating an undue share of produced wealth. While the modern system of banking and credit may be said to be even yet in its infancy, that portion of the assets of the community which is to-day in the strong boxes of the bankers, would, if declared, be an astounding revelation of the recent profits of this particular business; and not only has the business itself become a most profitable monopoly, but its interests in a very few hands are diametrically opposed to the interests of the majority. By 1egislation intended to contract the currency and force down all prices, including wages, the price paid for labor, the money owner has been able to increase the purchase power of his sovereign or dollar by the direct diminution of the price of every kind of property measured in money."
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CHAPTER V.
EFFORTS TO REMONETIZE SILVER AND PRESERVE THE GREENBACK.
"According to my viewers of the subject, the conspiracy which seems to have been formed here and in Europe, to destroy by legislation and otherwise, from three-sevenths to one-half, of the metallic money of the world, is the most gigantic crime of this or any other age." - John G. Carlisle, in 1878.
"It is the monometallists who are the authors of the depreciation which they point to as a proof of the unworthiness of the metal they cry down. They resemble the people who, having tied the logs of a horse, call out for him to be killed because he does not gallop." - Henri Cernushi.
In the preceding chapter, the writer faithfully endeavored to give a true history of the legislation culmination in the act of February 12, 1873, which struck down the standard silver dollar as the unit of account.
Step by step, the money power successfully attained its great end in the halls of Congress, and, with the downfall of silver, nothing apparently stood in its way for the complete control of the currency of the nation, and consequently an oppressive mastery over all other property.
The financial legislation, up to this period, was dictated by the national banks and their firm allies, the money lenders of London.
Congress merely registered the demands of this money power upon the statute books as the law of the land.
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Since April 1, 1873, we have ascertained that a single standard of gold was fastened upon the nation by the combined influence of England and her ally - the national banking system.
The passage of the so-called specie resumption act of 1875 planted this country upon a gold standard, and practically gave the banks a monopoly of the currency.
This was the policy planned and matured by the money power to place the vast business interests of the nation upon a bank credit basis as the sole method of carrying on all trade and commerce.
The way was apparently clear to substitute a national bank credit currency in lieu of legal tender silver and greenbacks, force al1 business to bc tributary to the banks, and to perpetuate a huge national debt.
This system of finance was the exact counterpart of that of England - in fact, it was borrowed from that country.
That the scheme of finance embodied in the national banking act was imported from England by John Sherman - the author of the original bill providing for its creation - is indisputable.
In one of his reports as Secretary of the Treasury, Mr. Sherman refers to this fact and says: "Both England and the United States have settled upon a bank currency secured by government bonds."
This language of Mr. Sherman, in thus speaking of England and the United States, signifies a unity of purpose to fasten on this country the British system.
To illustrate the immense power of the Bank of England over the people of Great Britain, we quote from a report made by the Chamber of Commerce of the city of Manchester, England, in 1859, which says: -
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"Although it scarcely comes within the scope of their present object, the board will add a reflection upon the subject of the undue privileges assumed by the Bank of England. That such a power over the property and even over the lives of the people of this country can be allowed to exist is one of the phenomena of our civilization. That their directors, twenty-six in number, can in secret session, without the consent of their constituents, decide the value of all property, is to be regarded as one of the greatest crimes against modern civilization."
In the face of this indictment against the Bank of England, Mr. Sherman appropriated its plan as the model of his scheme - the national banking act of February 25, 1863.
After the demonetization of silver in 1873, the most disastrous panic ever known in history up to that time, swept over this country, tens of thousands of failures occurred, entailing losses of hundreds of millions of dollars of capital.
The extent of the loss wrought by that great crash cannot be described by the language of man. Resource must be had to figures to convey an adequate idea of the magnitude of the disaster flowing from this wide spread ruin and wreckage of values.
In 1873, the number of failures was 5,183, with liabilities of $228,500,000 1n 1874,the failures were 5,830, and the liabilities, $155,239,000; in 1875 the failures were 7,740, and liabilities of $201,000,000;in 1876, the number of failures was 9,092 with a loss of $191,000,-000; in 1877, the failures were 8,872 and liabilities were $190,669,000; in 1878, the failures reached 10,478 with the vast aggregate of $234,383,000 in liabilities - a total of failures numbering 45,195, with liabilities of $1,ll0,-
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906,000 - exceeding the enormous war indemnity paid by France to Germany.
Exclusive of this immense loss to business, the amount of suffering borne by the people will never be known to the historian.
Hundreds of thousands of skilled and unskilled workmen were thrown out of employment, although the crops were abundant, and the number of consumers was larger than ever before known.
Then, for the first time in the history of the United States, appeared that phenomenon - the American tramp - whose appearance and permanency, as an established institution in civil society, is a problem that must be solved some time in the near future.
Then occurred an universal reduction of wages in all the leading industries throughout the United States, and in many eases skilled workmen received a wage of less than one dollar per day. Hundreds of thousands of American citizens, the flower of the industrial class, struck against these starvation wages, and these strikes spread all over the United States, resulting in tumults, riots,- and bloodshed, assuming the proportions of a civil war.
The United States troops were called out to put down the workingmen at the point of the bayonet, and their just grievances were quenched by the regular army.
It was during this period that a celebrated divine, in a sermon delivered from his pulpit, said: -
"Is not a dollar a day enough to buy bread? Water costs nothing! And a man who cannot live on bread is not fit to live. A family may live, laugh, love, and be happy, that eats bread in the morning with good
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water, and good water and bread at noon, and water and bread at night."
This humane discourse was uttered by a minister of the gospel who received the princely salary of $25,000 per annum.
Jay Gould, the great railroad wrecker, said: "We shall shortly find ourselves living under a monarchy. I would give a million dollars to see Grant in the white house."
The New York Times, a republican journal, said: -
"There seems to be but one remedy, and it must come - a change of ownership of the soil and the creation of a class of land-owners on the one hand and of tenant farmers on the other - something similar to what long existed in the older countries of Europe."
Hon. J. C. Burrows, a republican member of Congress from Michigan, gave utterance to the following language in a speech delivered by him on the question of finance: -
"To-day, the best that could happen to the financial interests and the business interests would be for Congress to pass a law, at its very next session, to punish with death any member of Congress that would make a speech on finance for the next twenty years. What we want is to be let alone, and we are on the high road to prosperity."
Rev. Joseph Cook, of Boston, a divine and public lecturer, used this remarkable language in a speech delivered by him: -
"The strongest of this generation wants a dictator. I say come on with your schemes of confiscation and forced loans, and graded income taxes, and irredeemable currency, under universal suffrage, and if you are sufficiently frank in proclaiming the doctrines of your ringleaders, then, under military necessity, and even here in the United States, we must get rid of universal
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suffrage, and we shall. Rather than allow these things we will have one of the fiercest of civil wars."
The Nevada Chronicle, the organ of the millionaire Senator Sharon, editorially said: -
"We need a stronger government. The health of the country demands it. Without capital and capitalists our government would not be worth a fig. The capital of the country demands protection; its rights are as sacred as the rights of the paupers who are continually prating of the encroachments of capital and against centralization. We have tried Grant, and we know him to be a man for the place above all others. He has nerve. As President he would be commander-in-chief of the army and navy, and when the communistic tramps of the country raise mobs to tear up railroad tracks, and to sack cities on the sham cry of 'bread or blood,' he would not hesitate to turn loose upon them canister and grape. The health of the country has to bear the burden of government and it should contro1 it. The people are becoming educated up to this theory rapidly, and the sooner the theory is recognized in the constitution and laws, the better it will be for the people. Without blood, and rivers of it, there will be no political change of administration. The moneyed interests, for self-preservation, must sustain the republican party. The railroads, the banks, and the manufacturers, the heavy importers, and all classes of business in which millions are invested, will sustain the supremacy of the republican party.
"To avert fearful bloodshed, a strong central government should be established as soon as possible."
These are but a few of the many expressions of the sentiments entertained by a corrupt and subsidized press, clerical hypocrites, and gigantic knaves.
United States Senator Sharon was one of the most notorious corruptionists and libertines that ever disgraced the name of man. Statesmen and financiers of
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the stamp of Gould and Sharon are libels on the human race, and their influence was a standing menace against the liberties of the people.
This panic hung over the people like a pall for seven long years. The extent of the suffering throughout the duration of this panic is eloquently expressed by Colonel Ingersoll, who said: -
"No man can imagine, all the languages of the' world can not express what the people of the United States suffered from 1873 to 1879. Men who considered themselves millionaires found that they were beggars; men living in palaces, supposing they had enough to give sunshine to the winter of their age, supposing that they had enough to have all they loved in affluence and comfort, suddenly found that they were mendicants with bonds, stocks, mortgages, all turned to ashes in their hands. The chimneys grew cold, the fires in furnaces went out, the poor families were turned adrift, and the highways of the United States mere crowded with tramps."
Of course the wise men of that day, in their conceit, discovered a reason for the panic of
1873. In their learned dissertations on the origin of this financial breakdown, they asserted that over production was the moving cause that so fearfully multiplied failures, threw workmen out of employment, and made hundreds of thousands of men, women, and children feel the pangs of hunger and starvation.
The reasoning of these financial wiseacres took the form of the following syllogism: Panics, want and starvation are results of the production of large quantities of wheat, corn, and other date the American people produced immense crops of farm products; therefore, these immense crops were the
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cause of panics, bankruptcies, loss of employment, hunger, and starvation. Such was the theory gravely announced by so-called learned professors of political economy.
This doctrine was taken up and echoed in the halls of Congress by alleged statesmen, reiterated in the press, and formed the burden of the stump speeches of designing politicians who sought political preferment. This absurd, sophistical argument had some weight-with the unthinking. Ordinarily, instances of such suffering that were prevalent during the panic of 1873, usually proceeded from failures of crops.
It is a historical fact that a1l great panics that had occurred in the United States up to this time, were during periods when nature exerted herself to the utmost to make bounteous provision for the wants of man.
The scarcity of money, the want and suffering became so great that, in 1876, the Chamber of Commerce of New York City adopted a resolution urging the immediate repeal of the specie Resumption Act of January 24, 1875.
It was on this occasion that John Sherman met with this body, and gave utterance to the statement quoted in the preceding chapter that, "The United States as usual was influenced by Great Britain in making gold coin the standard. This suits England but it does not suit us."
One great cause of the panic originating in 1873, was the natural result of that financial policy, which had persisted in a long continued contraction of the currency, a policy initiated by Hon. Hugh McCulloch, who had been appointed Secretary of the Treasury in 1865.
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Upon his appointment as the head of the Treasury Department, he at once took measures, in pursuance of the various acts of Congress, to fund the currency of the nation into interest-bearing bonds, and to create a permanent public debt.
Under the act of April 12, 1866, the Secretary of the Treasury was authorized to exchange interest-bearing bonds for the notes circulating as money, whether said notes were interest-bearing or otherwise.
Secretary McCulloch, a national banker by profession, proceeded to carry out this policy of a merciless contraction of the currency to the full extent of his power.
At the time he began this policy of funding the currency into long time interest-bearing bonds, the entire volume of the various notes performing the functions of money amounted to the sum of $1,983,000,000, exclusive of gold and silver coin. This volume of currency consisted of greenbacks, temporary loan certificates, one and two-year treasury notes, certificates of indebtedness, postal currency, compound interest treasury notes, fractional currency, 7-30 notes of August and September, 1864, 7-30 notes of 1864-65, state bank circulation, and national bank notes.
The two classes of 7-30 treasury notes alone amounted to $845,553,000
It has been denied that these treasury notes circulated as money, but General Logan and numerous other public men of that day, declared that these notes formed a very material part of the volume of currency.
With this large volume of circulation the national banking money power saw that it was impossible to obtain control of the currency of the nation.
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Money being plentiful, business was transacted on a cash basis, and, therefore, the people were not compelled to borrow the circulating notes of the national banks at a high rate of interest, and thus be placed in the power of these banks.
These conditions were so apparent, that, in his rcport as Secretary of the Treasury for the year 1865, Mr. McCulloch said:
"The country as a wholc, notwithstanding the ravages of war and the draught upon labor, is by its greatly developed resources, far in advance of what it was in 1857. The people are now comparatively free from debt."
Hence it was the policy of the national banking money power, by this funding of the ready cash of the country into bonds, and substituting the national bank circulation for the currency issued by the government, to control the business of the nation, and ultimately the votes of the people who were obligated to the banks as borrowers.
The national banks desired that all business should be done upon credit; that this credit should be given to them by the government in the form of national bank notes, the latter form of currency to be loaned by the banks to the business interest of the country.
Secretary McCulloch carried out this policy so energetically, and contracted the volume of legal tender currency so rapidly, that strong protests went up from the people, and, on the 3d of February, 1868, Congress forbade the further destruction of the legal tenders, which had been reduced to $346,000,000. The total contraction of all forms of notes circulating as money, reached the enormous sum of $1,ooo,ooo,ooo, during the administration of Mr. McCulloch. We include in
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these last figures, all government obligations utilized as money by the people, whether legal tender or othcrwise.
In a speech delivered in the Senate in 1874, General Logan stated that the contraction of the volume of money up to that time was more than one billion dollars
It was this murderous policy of contraction, initiated by Secretary McCulloch and followed by his successors, that eventually led to the panic of 1873, from which dates a universal stagnation of business lasting seven long years.
During this panic, the democracy was successful in the elections of 1874 and for the first time since 1860, the Lower House was controlled by the party of Jefferson and Jackson.
It was then ascertained that silver had been demonetized by the act of February 12, 1873, and the House at once endeavored to enact measures to undo the wrong.
During the Forty-fourth Congress, which came into existence March 4,1875, and continued in power unti1 the 4th of March, 1877,the President was republican. In the Senate there were 46 republicans, 29 democrats, and one vacancy. The House of Representatives was composed of 186 democrats and 107 republicans.
This Congress convened on the 6th of December, 1875.
On March 27, 1876, the Committee on Appropriations brought forward House bill 2,450, which appropriated money for a deficiency for the Bureau of engraving and printing, and section a provided for the issue of subsidiary silver.
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Mr. Reagan, of Texas, offered an amendment making the trade dollar legal tender for any amount not exceeding fifty dollars, and the silver coins less than one dollar for any amount not exceeding twenty-five dollars. This was agreed to. Yeas 124- 99 democrats, 22 republicans, 1 independent; nays 94 - 28 democrats, 65 republicans, 1 independent. As amended the bill passed. Yeas 122 -50 democrats, 70 republicans, and 2 independents; nays 100 - 80 democrats, 18 republicans, and 2 independents.
The bill was transmitted to the Senate, and it was referred to the Finance Committee, of which Mr. Sherman was chairman.
On April 10, 1876, Mr. Sherman, from the Finance Committee, reported the bill with amendments; one amending section 3 so as to authorize the coinage of a silver dollar of 412.8 grains - a legal tender not exceeding twenty dollars in any one payment except for customs, dues, and interests on public debt, and stopped the coinage of trade dollars, Another - a new section 4 - authorized the exchange of silver dollars for an equal amount of United States notes to be retired, canceled, and not reissued; and also for coining silver bullion at its market value. The amended bill thus reported by Senator Sherman, authorized the coinage of a silver dollar of 412.8 grains, which, whilc it would increase its legal tender debt-paying power from five dollars to treaty dollars, could not be received for custom dues, and could not be utilized for the payment of interest on the public debt.
These silver dollars werc to be exchanged for an equal amount of United States notes, which were thus to be permanently retired from circulation.
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The propositions of the amended bill, as reported by Senator Sherman, should it become a law, would not increase the volume of money a single dollar, for the reason that the silver dollar would be solely used to retire an equal amount of legal tender currency.
The most vicious part of the amended bill was that which limited the legal tender debt-paying power of the silver dollar to twenty dollars; the legal tender currency, for which the silver dollars were to be substituted, was an unlimited legal tender, except for duties on imports and interest on the public debt.
Therefore, the adoption of this measure would be the substitution of a limited legal tender silver dollar for a full legal tender currency, leaving gold the sole unlimited legal tender for the payment of all debts, public and private, including duties on imports and interest on the public debt.
The amended bill was discussed in the Senate, and, on motion of Mr. Sherman, sections 3 and 4 of the amended bill were stricken out, and that motion carried out of the bill the House amendment offered by Mr. Reagan which proposed to make trade dollars legal tender to the amount of fifty dollars, which, by the act of February 12, 1873, were limited to five dollars for any one payment.
By this parliamentary device with the House bill, Mr. Sherman succeeded in killing that measure, the passage of which would have conferred an enlarged debt-paying power on the trade dollar.
On June 10, 1876, Mr. S. S. Cox, from the Committee on Banking and Currency, reported a joint resolution to issue the silver coins in the Treasury to an amount not exceeding $10,000,000 in exchange for an equal
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amount of legal tender notes, to be kept as a special fund, to be reissued only upon the retirement of fractional currency; which was passed without a division.
June 21, 1876, in the Senate, the House joint resolution was amended by adding a section prohibiting the coinage of the trade dollar except for export trade; thus striking down the trade dollar, the only dollar authorized by the coinage law of 1873.
Again, the fine Italian hand of the money power was visible in the Senate amendment to this joint resolution.
On June 10, 1876, Mr. Cox, from the Committee on Banking and Currency, reported a resolution in three sections, providing for an increased coinage of silver. It was passed without division, and was transmitted to the Senate.
In the Senate June 27, 1876, the bill was considered on the report of the Finance Committee to strike out all after the enacting clause and insert four new sections. This was a substitute proposed by the Senate Committee on Finance, headed by the distinguished senior Senator from Ohio.
Section 1 provided for the coinage of silver dollars of 412.8 grains, to be legal tender for sums not exceeding twenty dollars.
Section 2 provided for exchanging such dollars and minor coins for legal tenders to be canceled and not reissued or replaced.
Section 3 provided for purchasing silver bullion at market rates for such coinage, to be made without loss in coinage and issue.
Section 4, prohibiting legal tender of the trade dollar and limiting its coinage to export demand. This was before the law of July 22, 1876, had been enacted.
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Again the scheme to substitute a limited legal tender silver dollar for United States notes and treasury notes was brought forward in these amendments.
The continued efforts of the Senate to retire permanently the government legal tender notes were a part of the plan of the national banking money power to force the business of the country to be transacted by a credit money.
This bill also aimed at the coinage of silver on government account alone, hence, should the silver so coined out of the bullion purchased by the government decline in bullion value as compared with gold, the national banking money power would demand that the silver dollar be redeemed in gold. It furthermore took away all legal tender debt-paying power of the trade dollar, and limited its coinage to export demand.
On June 28, 1876, Senator Bogy moved to amend section x of the Senate bill by striking out the words "Hot exceeding twenty dollars," the effect of which would be to make the silver dollar a full legal tender for the payment of all debts. The amendment was agreed to by a vote of 18 to 14.
On June 29, 1876, the bill as amended was recommitted to the Finance Committee, where it slept the sleep that knows no waking.
On July 19, 1876, in the House of Representatives, Mr. Bland, from the Committee on Mines and Mining, reported resolution 3,635, authorizing the free coinage of gold and silver. This resolution was carried over to the next session of Congress, and, on December 13, 1876, Mr. Bland offered a substitute for the resolution of July 19, 1876, which provided for the free and unlimited coinage of the silver dollar of 412 1/2 grains, with full legal tender power.
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This substitute, which restored silver to the position it occupied prior to 1873, was passed by a vote of 168 yeas to 53 nays. It was sent to the republican Senate, referred to the Finance Committee where it was smothered by John Sherman.
On August 15, 1876, a joint resolution was adopted by Congress which provided for the creation of s Monetary Commission, "To consist of three Senators, to be appointed by the Senate, three members of the House of Representatives, to be appointed by the Speaker, and experts not exceeding three in number, to be selected by and associated with them." Congress instructed the commission to make an examination into the money question, and to give its opinion as to "The best means for providing for facilitating the resumption of specie payments."
On March 2, 1877, the commission made its report, or more strictly speaking, several reports. The majority report signed by five of its members, gave a history of the bi-metallic laws in force previous to 1873, together with their effects on the value of commodities, trade, and commerce, and, as its conclusion, advocated an immediate return to the bi-metallic standard of sixteen to one.
In speaking of the effect of the volume of money on values, and the baleful influences of falling prices on society, the majority report says: -
"At the Christian era the metallic money of the Roman empire amounted to $1,800,000,000. By the end of the fifteenth century it had shrunk to less than $200,000,000. During this period a most extraordinary and baleful change toot place in the condition of the world. Population dwindled, and commerce, arts, wealth, and freedom all disappeared. The people were
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reduced by poverty and misery to the most degraded conditions of serfdom and slavery. The disintegration of society was almost complete. The conditions of life were so hard that individual selfishness was the only thing consistent with the instinct of self-preservation. All public spirit, all generous emotions, all the noble aspirations of man shriveled and disappeared as the volume of money shrunk and as prices fell.
"History records no such disastrous transition as that from the Roman empire to the dark ages. Various explanations have been given of this entire breaking down of the framework of society, but it was certainly coincident with the shrinkage in the volume of money, which was also without historical parallel The crumbling of institutions kept even step and pace with the shrinkage in the stock of money and the falling of prices. All other attendant circumstances than these last have occurred in other historical periods unaccompanied and unfollowed by any such mighty disasters. It is a suggestive coincidence that the first glimmer of light only came with the invention of bills of exchange and paper substitutes, through which the scanty stock of the precious metals was increased in efficiency. But not less than the energizing influence of Potosi and Fll the argosies of treasure from the net world were needed to arouse the old world from its comatose sleep, to quicken the torpid limbs of industry, and to plume the leaden wings of commerce.
"It needed the heroic treatment of rising prices to enable society to reunite its shattered links, to shake off the shackels of feudalism, to relight and uplift the almost extinguished torch of civilization. That the disasters of the dark ages were caused by decreasing money and falling prices, and that the recovery therefrom and the comparative prosperity which followed the discovery of America were due to an increasing supply of the precious metals and rising prices, will not seem surprising or unreasonable when the noble functions of money are considered. Money is the
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great instrument of association, the very fiber of social organism, the vitalizing force of industry, the protoplasm of civilization, and as essential to its existence as oxygen is to animal life. Without money civilization could not have had a beginning; with a diminishing supply it must ]anguish, and, unless relieved, finally perish."
The report sets out the reason why silver was demonetized in 1873. It says: -
"Manifestly the real reason for the demonetization of silver was the apprehension of the creditor classes (money lending classes) that the combined production of the two metals would raise prices and cheapen money unless one of them was shorn of the money function. In Europe this reason was distinctly
avowed."
This conclusion has been abundantly verified, inasmuch as every attempt made by Congress for the restoration of silver as legal tender money has been denounced as a scheme to rob the public creditors - a charge which has been reiterated thousands of times in the press, in the halls of Congress and elsewhere.
Professor Bowen, of Massachusetts, and Representative Gibson handed in a minority report, in which it was stated that every attempt made previous to 1873 to establish a double standard "has been a total failure."
Senator Boutwell, in his minority report as a member of the commission, stated his conclusions in effect as follows; he said: -
"A successful use of gold and silver simultaneously in any country can be effected only by their consolidation upon an agreed ratio of value, or by the concurrence of the commercial nations of the world."
He, therefore, advocated a postponement of the free coinage of silver by the United States, "Until the
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effort to secure the cooperation of other nations has been faithfully tried."
On the 4th of March, 1877,Rutherford B. Hayes was inaugurated President of the United States. He was the beneficiary of that fraud - the Returning Board of Louisiana. In the formation of his cabinet he selected John Sherman for the responsible post of Secretary Of the Treasury.
During the time he was at the head of that greet department, the national banking money power became more imperious in its demands upon the government. The United States Treasury was made wholly subservient to the clearing house of New York City.
The immense resources of the Treasury were practically placed at the disposal of the banks, which fact became so notorious, that United States Senator James B. Beck and other members of Congress denounced Secretary Sherman for bestowing such munificent favors upon a fear great banks.
During the session of the Forty-fifth Congress, which came into power March 4, 1877, and which was in control until March 4, 1879 the President was republican; the House was democratic by a vote of 156 to 136; the Senate consisted of 39 republicans, 36 democrats and 1 independent.
In the first or called session of the Forty-fifth Congress, November 5, 1877, Mr. Bland, of Missouri, introduced a bill in the House of Representatives entitled, "An act to authorize the free coinage of the standard silver dollar and to restore its legal tender character."
The text of the bill was as follows: -
"Be it enacted by the Senate and House of Representatives of the United States of America in Congress
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assembled, That there shall be coined at the several mints of the United States, silver dollars of the weight of 412 1/2grains troy of standard silver, as provided in the act of January 18, 1837, on which shall be the devices and superscriptions provided by said act; which coins, together with all silver dollars heretofore coined by the United States of like weight and fineness, and shall be a legal tender, at their nominal value, for all debts and dues, public and private, except where otherwise provided by contract; and any owner of silver bullion may deposit the same at any United States coinage mint or assay office, to be coined into such dollars, for his benefit, upon the same teens and conditions as gold bullion is deposited for coinage under existing laws.
"Section 2. All acts and parts of acts inconsistent with the provisions of this act are hereby repealed."
The rules were suspended by a vote of 164 yeas to 34 nays, and the bill was passed and transmitted to the Senate.
On November 21, 1877, Mr. Allison, from the Finance Committee, reported the bill to the Senate with amendments to strike out the clause beginning "And any owner of silver bullion," and to insert in lieu thereof a purchasing clause, and to add section a for an international monetary conference.
>From 1862 up to 1875, the legislation of Congress tended wholly for the benefit of the East. Almost every lair was enacted with the view of giving the New England states, New York, and Pennsylvania a great preponderance over the rest of the nation; exorbitant tariffs were levied on imported goods for the benefit of Eastern manufacturers, the burdens of which fell upon the consumer; foreign contract labor laws were adopted to afford these highly-protected manufacturers an abundant supply of cheap labor as a means for
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crushing the various labor organizations; out of the billions of money appropriated by Congress during that period, by far the greater portion was expended in those few states lying along the Atlantic; Eastern corporations received subsidies of public money to the amount of millions; the great railway corporations, burdened with liabilities far exceeding their assets, robbed the west and south of hundreds of millions of dollars by the imposition of heavy transportation charges, and these railways were owned by Eastern capitalist; while the rich silver mines of the West mere practically rendered valueless by the demonetization of silver.
During the debate in the Senate on this silver bill, Hon. John J. Ingalls, a republican Senator from Kansas, in a speech delivered on the 14th of February, 1877,used the following strong language: -
"If by any process all business were compelled to be transacted on a coin basis, and actual specie payments should be enforced, the whole civilized world would be bankrupt before sunset. There is not coin enough in existence to meet in specie the one-thousandth part of the commercial obligations of mankind. Specie payments, as an actual fact, will never be resumed, neither in gold nor silver in January, 1879, nor at any other date, here nor elsewhere. The pretense that they will be is either dishonest or delusive."
The Senator in the same speech points to the fact that the Eastern section of the country had subordinated all Federal legislation to their demands, he thus arraigns the greed of the East: -
"The Senator from Wisconsin was right. It is not the east against the west.
"It is the east against the west and south combined. It is the corn and wheat and beef and cotton of the country against its bonds and its gold; its productive
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industry against its accumulations. It is the men who own the public debt against those who are to pay it, if it is to be paid at all. If the bonds of this government are ever paid, they will be paid by the labor of the country, and not by its capital. They ate exempt from taxation and bear none of the burdens of society.
"The alliance between the west and the south upon all matters affecting their material welfare hereafter is inevitable. Their interests are mutual and identical. With the removal of the causes of political dissension that have so long separated them, they must coalesce, and united they will be invincible. The valleys of the Mississippi and Missouri, with their tributaries, form an empire that most have a homogeneous population and a common destiny from the Yellowstone to the Gulf.
"These great communities have been alienated by factions that have estranged them only to prey upon them and to maintain political supremacy by their separation. Unfriendly legislation has imposed intolerable burdens upon their energies; invidious discriminations have been made against their products; unjust tariffs have repressed their industries. While vast appropriations have been made to protect the harbors of the Atlantic, and to erect beacons upon every headland to warn the mariner with silent admonition from the "merchant-marring rocks," the Mississippi was left choked with its drifting sands till the daring genius of Eads undertook the gigantic labor of compelling the great stream to dredge its own channel to the sea. The opening of this avenue of commerce marks the epoch of the emancipation of the west and south from their bondage to the capital of the east. In asking the passage of this bill they are asking less than they will ever ask again. When I reflect upon the burdens they have borne, the wrongs they have suffered, I am astonished at their' moderation."
The charges made by Mr. Ingalls against the cupidity of the East were true, and at the same time it was
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a bitter condemnation of the record of the republican party.
During the same speech on this bill, the brilliant Kansan had recourse to metaphor to upbraid those who advocated a single standard of gold, and at the same time he paid a glowing tribute to the monetary properties of the silver dollar as the money of the people
He said: -
"No enduring fabric of national prosperity can be builded on gold. Go1d is the money of monarchs; kings covet it, the exchanges of nations are effected by it. Its tendency is to accumulate in vast masses in the commercial centers, and to move from kingdom to kingdom in such volumes as to unsettle values and disturb the finances of the world. It is the instrument of gamblers and speculators, and the idol of the miser and the thief. Being the object of so much adoration, it becomes haughty and sensitive and shrinks at the approach of danger, and whenever it is mast needed it always disappears. At the slightest alarm it begins to loot for a refuge. It flies from the nation at war to the nation at peace. War makes it a fugitive.
"No people in a great emergency ever found a faithful ally in gold. It is the most cowardly and treacherous of all metals. It makes no treaty that it docs not break. It has no friend whom it does not sooner or later betray. Armies and navies are not maintained by gold. In times of panic and calamity, ship t and disaster, it becomes the chief agent and minister of ruin. No nation every fought a great war by the aid of gold. On the contrary, in the crisis of greater peril it becomes an enemy more potent than the foe in the field; but when the battle is won and peace has been secured, gold reap and claims the fruits of victory. In our own civil war it is doubtful if the gold of
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New York and London did not work us greater injury than the powder and lead and iron of the rebels. It was the most invincible enemy of the public credit. Gold paid no soldier nor sailor. It refused the national obligation. It was worth most when our fortunes were lowest. Every defeat gave it increased value. It was in open alliance with our enemies the world over, and all its energies were evoked for our destruction. But as usual when danger has been averted and the victory secured, gold swaggers to the front and asserts the supremacy. But silver is the money of the people. It is the money of cages and retail. Its tendency is toward diffusion and dissemination. It enters into the minute concerns of traffic, and is exchanged day by day for daily bread. It penetrates the remotest channels of commerce, and its abundance, balk, and small subdivisions prevents its deportation in sufficient amount to disturb or unsettle values. If it retires at the approach of danger, or from the presence of an inferior currency, it still remains at home ready to respond to the first summons for its return."
The characteristics which he attributes to gold in this beautiful figure of speech, were those which belonged to its owners, and thus he scathingly denounced the greed of the gold gamblers and bullion brokers of the East, who, during the war, rejoiced at every reverse of the northern armies, for, with the sinking of the fortunes of the Union cause, the more valuable became gold proportionately.
The silver bill as amended by the Senate was returned to the House for concurrence and passage. The manner in which the House bill was mutilated by the Senate aroused the anger of the House, and a fierce debate arose between the friends of silver and its opponents. Some of those who most strongly opposed the bill as a concession to the West and South
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were men who men notorious for the scandals that blackened their reputations as public men. Those members of Congress, who opposed the remonetization of silver in any form whatever, had, in their past careers, shown a remarkable inclination for Credit Mobilier stock, and other corrupt deals which had so deeply disgraced preceding Congresses.
Yet these Credit Mobilicr statesmen were the ones who prated the loudest for the "public credit," "the public faith," and "honest money." It was Satan preaching against sin.
Among other powerful advocates of the coinage of silver me John G. Carlisle, who was recognized on the floor of the House as its ablest logician. Mr. Carlisle charged that the demonetization of silver was brought about by a conspiracy of the money power.
He said: -
"I know that the world's stock of precious metals is none too large, and I see no reason to apprehend that it wil1 ever be so. Mankind will be fortunate indeed if the annual production of gold and silver coin shall keep pace with the annual increase of population, commerce, and industry. According to my views of the subject, the conspiracy which seems to have been formed here and in Europe to destroy by legislation and otherwise from three-sevenths to one-half of the metallic money of the world is the most gigantic crime of this or any other age. Thc consummation of such a scheme would ultimately entail more misery upon the human race than all the wars, pestilences, and famines that ever occurred in the history of the world.
"The absolute and instantaneous destruction of half the entire movable property of the world, including houses, ships, railroads and other appliances for carrying on commerce, while it would be felt more sensibly at the moment, would not produce anything like a pro-
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longed distress and disorganization of society that must inevitably result from the permanent annihilation of one-half the metallic money of the world."
This terrific arraignmcnt of the money power was followed by an appeal to the House, in which he advised the blocking of the wheels of government by a refusal to appropriate money for its support should the President veto the bill. He said: -
" The struggle now going on cannot cease, and ought not to cease, until all the industrial interests of the country are fully
and finally emancipated from the heartless domination of syndicates, stock exchanges, and other great combinations of money grabbers in this country and in Europe. Let us, if we can do no better, pass bill after bill, embodying in each some subtantia1 provision for relief, and send them to the executive for his approval. If he witholds his signature, and we are unable to secure the necessary vote, here or elsewhere, to enact them into laws notwithstanding his veto, let us, as a last resort, suspend the rules and put them into the general appropriation bills, with the distinct understanding that if the people can get no relief the government can get no money."
After a long debate the House anally acquiesced in the senate amendments. It was the bill as amended by the Senate or nothing, for at that tinge the upper house was the stronghold of the money grabbers, syndicates, and combinations of capital, chose greed was so severely denounced in the powerful speech of Mr. Carlisle.
The bill as amended by the Senate finally passed both houses, and was presented to President Hayes, who returned it to the House with his veto and a message stating his reasons for refusing to sign the measure.
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In his veto message, the President states that one of the reasons why the bill does not meet hie approval arose from the fact that the proposed dollar would be worth but ninety or ninety-two cents, as compared with the standard gold dollar.
It will be remembered that the sole reason advanced by John Sherman, at this time Secretary of the Treasury, for the demonetization of the silver dollar in 1868 and subsequent years, was, that the silver dollar was more valuable than the gold dollar.
President Hayes, and presumably his Secretary of the Treasury, urged as a reason for the veto of this bill providing for the coinage of silver, that it was worth less than the gold dollar.
The President says: -
"The right to pay duties in certificates for silver deposits will, when they are issued is sufficient amount to circulate, put an end to the receipt of revenues in gold, and thus compel the payment of silver for both the principal and interest on the public debt."
The future receipts of revenues have shown that this prophecy of President Hayes fell to the ground. After the passage of this bill over his veto, the volume of gold in circulation and in the banks increased in the course of a few years to many millions of dollars.
The President further says: -
"The standard of value should not be changed without the consent of both parties to the contract. National promises should be kept with unflinching fidelity. There is no power to compel a nation to pay its just debts. Its credit depends on its honor. The nation owes what it has led or allowed its creditors to expect. I cannot approve a bill which, in my judgment, authorizes the violation of sacred obligations The obligation of public faith transcends all questions
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of profit or public advantage. Its unquestionable maintenance is the dictate as well of the highest expediency as of the most necessary duty, and should ever be carefully guarded by the executive, by congress, and by the people."
This plea for the poor bond holder, that noble patriot who originally bought bonds as low as thirty-five cents on the dollar, bearing gold interest the equivalent in currency to eighteen per cent., payable a year in advance, and used by him as loaded dice to gamble on the public credit, was the dear object of the President's solicitude.
The bond holders who secured the passage of the Credit Strengthening Act of March 18, 1869 an act which enhanced the value of his bonds enormously, had become sacred in the eyes of the weak Hayes.
The veto message of the President angered Congress, and, on the same day, it rode rough shod over his veto by more than the necessary two-thirds vote, and the bill became a lair on the 28th day of February, 1878.
To enable the reader to fully understand the coinage law of 1878, we incorporate the text of the act in full.
It is as follows; viz.: -
"An act to authorize the coinage of the standard silver dollar, and to restore its legal tender character.
"Be it enacted, etc, That there shall be coined, at the several mints of the United States, silver dollars of the weight of 412 1/2 grains troy of standard silver, as provided in the act of January 18, 1837, on which shall be the devices and superscriptions provided by said act; which coins, together with all silver dollars heretofore coined by the United States, of like weight and fineness, shall be a legal tender, at their nominal value, for all debts and dues, public and private, except where otherwise expressly stipulated in the con-
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tract. And the secretary of the treasury is authorized and directed to purchase, from time to time, silver bullion at the market price thereof, not less than $2,000,000 worth per month nor more than $4,000,000 worth per month, and cause the same to be coined monthly, as fast as so purchased, into such dollars; and a sum sufficient to carry out the foregoing provision of this act is hereby appropriated out of any money in the treasury not otherwise appropriated. And any gain or seigniorage arising from this coinage shall bc accounted for and paint into the treasury, as provided under existing laws relative to the subsidiary coinage: Provided, That the amount of money at any one time invested in such silver billion, exclusive of such resulting coin, shall not exceed $5,000,000; And provided further, That nothing in this act shall be construed to authorize the payment in silver of certificates of deposit issued under the provisions of section 254 of the Revised Statutes.
"Section 2. That immediately after the passage of this act the President shall invite the governments of the countries comprising the Latin union, so called, and of such other European nations as he may deem advisable, to join the United States in a conference to adopt a common ratio between gold and silver, for the purpose of establishing, internationally, the use of bi-metallic money and securing fixity of relative value between those metals, such conference to be held at such place, in Europe or the United States, at such time within six months, as may be mutually agreed upon by the executives of the governments joining in the same, whenever the governments so invited, or any three of them, shall have signified their willingness to unite in the same.
"The President shall, by and with the advice and consent of the senate, appoint three commissioners, who shall attend such conference on behalf of the United States, and shall report the doings thereof to the President, who shall transmit the same to congress
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"Said commissioners shall each receive the sum of $2,5000 and their reasonable expenses, to bc approved by the secretary of state, and the amount necessary to pay such compensation and expenses is hereby appropriated out of any money in the treasury not otherwise appropriated.
"Section 3. That any holder of the coin authorized by this act may deposit the same with the treasurer or any assistant treasurer of the United States, in sums not less than ten dollars, and receive therefor certificates Of not less than ten dollars each, corresponding with the denominations of the United States notes. The coin deposited for or representing the certificates shall be retained in the treasury for the payment of the same on demand. Said certificate shall be receivable for customs, taxes, and all public dues, and, when en received, may be reissued.
"Section 4. All acts and parts of acts inconsistent with the provisions of this act are hereby repealed."
A comparison drawn between the provisions of the original bill introduced by Mr. Bland and passed by the House, and those of the act of February 28th, will be instructive.
The House bill was a free coinage measure, and it placed silver as a money metal on the same footing as gold. It proposed to restore silver to the same position which it held, in law, prior to its demonetization in 1873.
Free coinage of gold created an unlimited demand for it as money. Under free coinage, the owner of gold bullion had the right of entry to any mint of the United States, he could have his bullion transformed into gold coin without charge, and returned to him as full legal tender money. Therefore, the law which conferred the right of free coinage upon the owner of gold bullion created an unlimited demand
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of the use of that precious metal as money; the Government had never restricted the amount of gold coinage.
Free and unlimited coinage of silver likewise would have created a demand for it as money as extensive as its production.
In all ages, the chief use of the precious metals arose from their utility as a medium of exchange - money.
The demand for the use of those metals has always exceeded their supply.
By the Bland-Allison lair, the coinage of silver dollars was limited, and that coinage was on Government account alone.
At the time of the passage of the Bland-Allison law, the production of silver from the mines of the United States amounted to more than $45,000,000for that year.
Since the demonetization of silver in 1873, its total production in the United States amounted to $210,000,000.
This law provided for the purchase of not less than $2,000,000 of silver nor more than $4,000,000 per month.
The hellion so bought by the Government was to bc coined into dollars as fast as purchased, and the gain or seigniorage arising from this coinage was to be paid into the Treasury.
It will be seen that the Secretary of the Treasury was not legally compelled to purchase more silver per month than the minimum amount ($2,000,000).
A purchase of the minimum amount of silver wou1d afford a market for only one-half of the yearly production, and this mould result in an accumulation of a
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large surplus for which there would be no demand. This surplus would fix the price of every ounce of silver mined in the United States, causing a fall in its bullion value.
This result would afford an opportunity for the national banking money power to point to the silver dollar as a "dishonest dollar," a "90-cent dollar."
Mr. Sherman held the Treasury portfolio, and it was averred that he would use all the influence of his once to discredit the new coinage. He was known to be an unrelenting enemy of the free coinage of silver, and his subsequent speeches and writings gave abundant proofs of that fact.
It was further provided in that act, that the amount of money at any one time invested in such silver bullion, exclusive of such resulting coin, should not exceed $5,000,000.
By this restriction the Secretary of the Treasury could limit the annual purchase of silver to $29,000,000. He was not compelled to purchase silver exceeding $2,000,000 per month, or $24,000,000 per annum, and this policy which was carried out by the Secretary, made the Government a "bear" in the silver market.
This law gave rise to a net form of contracts based upon the legal tender clause which contained the following language, "Except where otherwise expressly stipulated in the contract."
This exception was the most absurd provision ever embodied in a monetary law. It declared the silver dollar to be legal tender, yet it conferred upon money lenders the power to demonetize it by private contract. It made the merc will of an individual superior to the collective will of the nation. It placed the greed of
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the shylock above the power of the constitution. Every usurer was permitted to constitute himself a Congress and a President to demonetize silver at will. While the powerful Government of the United States was compelled to receive these silver dollars far debts and demands due it, the holders of mortgages could exact gold obligations. It transferred to the hands of the national banking money poorer the right to loan Government credit in the form of bank notes, costing it one cent on the dollar, at a high rate of interest, exact a note payable in gold, with the "vested privilege" of making war against the currency of the United States.
It built up a powerful privileged class, whose interests would be antagonistic to any future legislation of Congress, having for its object an enlarged use of silver as money,
In his uncontradicted evidence before the British gold and silver commission, on June 24, 1887, J. Barr Robertson stated that "The French law makes it criminal to act on the basis of premium on money or discount on moncy. It always did so."
The policy of France, which has the most scientific system of money in the world, makes it a crime for any one of its citizens to attempt to demonetize its money by private contract.
In that nation, the sovereign power of the State over the legal value of money cannot be impaired by the greed of money changers, bullion dealers, and bankers. After the enactment of this law a net system of written contracts providing for the payment of money came into vogue, denominated "gold contracts," all of which contained a stipulation that the obligation
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should be payable in "Gold coin of the present weight and fineness or its equivalent."
Railroad bonds and mortgages containing gold clauses, aggregating many hundreds of millions of dollars, were fastened upon this species of property, and real estate mortgages and promissory notes amounting to immense sums mere made payable in gold coin.
This plan of the money-lending class actually made an enormous indebtedness payable in gold, a coin constantly appreciating in value, and it practically made the single standard of gold the financial policy of the country.
Not a single United States bond expressed an agree-meat to pay in gold, and yet the Government turned the great majority of its citizens over to the tender mercies of the money-lenders of the East and Great Britain, by authorizing them to exact gold payments.
The legality of contracting against any part of the legal tender money of the nation is extremely doubtful; and it scorns that, on the plainest principles of justice, and on the highest grounds of public policy, a contract in which it is sought to demonetize legal tcndcr money is utterly void, and is therefore unconstitutional.
Section a of the Bland-Allison Act authorized the President to invite the countries of Europe to join the United States in a conference to secure the adoption of a common ratio between gold and silver, and for the purpose of establishing an international bi-metallic money, and securing fixity of relative value between these metals.
The President was authorized to appoint three Commissioners to represent the United States at such
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conference, if any should bc held. The Commissioners mere to report the doings of the conference and he was to transmit the same to Congress.
This section marked the beginning of those successive pilgrimages of so-called international monetary commissions, who, as the representatives of the United States, humiliated the American people by begging the aid of European monarchies to assist in the establishment of a financia1 system for this republic.
Section 3 provided for the issue of silver certificates to any person who deposited with the Treasurer or any Assistant Treasurer of the United States silver dollars in sums of not less than ten dollars.
The coin deposited for these certificates was to be retained in the treasury for the payment of the said certificates on demand. These certificates were receivable for customs, taxes and all public dues, and when so received could be reissued.
The object of this section in providing for the issuance of silver certificates was to obviate objections against the use of silver because of its weight. The certificate was a credit money based on the silver dollars so deposited, which latter constituted a trust fund as a means for redeeming the certificates.
To Senator Booth, of California, belongs the honor of suggesting the provisions of section 3 of this law.
Section 4 repealed all former laws inconsistent with the act.
When this bill was up for consideration before Congress, the national banking money power and its subsidized press continually prophesied that if the silver bill should become a law, the gold of the nation would take flight to Europe, leaving this country upon a
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silver basic. The leading national bank presidents of New York City were especially active in denouncing the bill, and numerous predictions were made by them that it would be impossible to resume specie payment if it became a law.
George S. Coe, President of the American Exchange National Bank of New York City, publicly stated that he would give $50,000 to be at the head of the line of those who would present themselves at the sub-treasury on the 1st day of January, 1879, to offer greenbacks for gold, should President Hayes not veto the bill.
So far as is known, Mr. Coe still retains his $50,000, which he publicly stated that he would offer for the privilege of having the first opportunity to present greenbacks for redemption in gold, and for the plain reason that greenbacks were at par with gold - that yellow divinity of the money changers - before the 1st day of January, 1879, approached.
One of the reasons urged against the passage of the Bland-Allison law, as stated heretofore, was that it would endanger the resumption of specie payments, and that it would result in placing the country on a silver basis.
On the 19th of March, 1878, three weeks after the law was in force, Senators Morill, Dares, Ferry, Jones, Allison, Kernan, Wallace, Bayard, and Voorhees, composing the Finance Committee of the Senate, had a conference with Secretary Sherman to obtain his views upon the effect of the new silver coinage law upon resumption.
Daring this conference the following statements were made by the Secretary to the committee in answer to the inquiries of its members: -
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Chairman: What effect has the silver bill had, or is likely to have upon resumption?
"Secretary Sherman: I do not want to tread on delicate ground in answering that question, Mr. Chairman. I shall have to confess that I have been mistaken myself. Noir, as to the silver bill, I have matched its operations very closely. I think the silver bill has had some adverse effects, and it has had some favorable effects, on the question of resumption. Perhaps the best way for me to proceed would be to state the adverse effects first It has undoubtedly stopped refunding operations. Since the agitation of the silver question, I have not been able largely to sell bonds, although I have made every effort to do so.
"Now, another adverse effect the silver bill has had is to stop the accumulation of coin. Since the 1st of January we have accumulated no coin, except for coin certificates, and except the balance of revenue over expenditure. The revenues in coin being more than enough to pay the interest of the debt and coin liabilities, we accumulate some coin.
"Another effect that the silver bill has had is to cause the return of our bonds from Europe. Although the movement of our bonds in this direction has been pretty steady for more than a year, yet it is latterly largely increased, how much I am not prepared to say.
"On the other hand, I will give the favorable effects. In the first place, the silver bill satisfied a strong public demand for bi-metallic money, and that demand is, no doubt, largely sectional. No doubt there is a difference of opinion between the West and South and the East on-this subject, but the desire for remonetization of silver was almost universal. In a government like ours it is always good to obey the popular current, and that has been done, I think, by the passage of the silver bill. Resumption can be maintained more easily upon a double standard than upon a single standard the bulky character of silver would prevent payments in it, while gold, being more portable, would be more
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freely demanded, and I think resumption can bc maintained with a less amount of silver than of gold alone.
"Senator Bayard: You are speaking of resumption upon the basis of silver, or of silver and gold?"
"Senator Sherman: Yes, sir; I think it can be maintained better upon a bi-metallic, or alternative standard, than upon a single one, and with less accumulation of gold. In this way remonetization of silver would rather aid resumption. The bonds that have been returned from Europe have been readily absorbed - remarkably so. The recent returns in Net York show the amount of bonds absorbed in this country is at least a million and a quarter a day. We have sold scarcely any from the Treasury since that time. This shows the confidence of the people in our securities, and their rapid absorption will tend to check the European scare.
"Senator Voorhees: That shows, Mr. Secretary, that this cry of alarm in New York was unfounded. Then, this capital seeks our bonds when this bi-metallic basis is declared?"
Secretary Sherman: Yes; many circumstances favor this. The demand for bonds extends to the West and to the banks.
"Senator Jones: Then, in its effect upon the return of the vast amount of bonds you refer to, would there not be an element of strength added in favor of resumption, in that the interest on these bonds returned mould not be a constant drain upon the country?
"Secretary Sherman: Undoubtedly.
"Senator Jones: Would the fact that they come back enable us to maintain resumption much easier?
"Secretary Sherman: Undoubtedly.
"Senator Bayard: You speak of resumption upon a bi-metallic basis being easier. Do you mate that proposition irrespective of the readjustment of the relative values of the two metals as we have declared them?
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"Secretary Sherman: I think so. Our mere right to pay in silver would deter a great many people from presenting notes for redemption who would readily do so if they could get the lighter and more portable coin in exchange Besides, gold coin can be exported, while silver coin could not be exported, because its market value is less than its coin value."
Senator Bayard: I understand that it works practically very well. So long as the silver is less in value than the paper you will have no trouble in redeeming your paper. When a paper dollar is worth ninety-eight cents nobody's going to take it to the Treasury and get ninety-two cents in silver; but what are on to do as your silver coin is minted' By the 1st of July next or the 1st of January next you have eighteen or twenty millions of silver dollars which are in circulation and payable for duties, and how long do you suppose this short supply of silver and your control of it by your coinage will keep it equivalent to gold - when one is worth ten cents less than the other?
"Secretary Sherman: Just so long as it can be used for anything that gold is used for. It will be worth in this country the par of gold until it becomes so abundant and bulky that people will become tired of carrying it about; bat in our country that can be avoided by depositing it for coin-certificates."
Such was the testimony given by Secretary Sherman in reply to the questions propounded to him by these distinguished men, and it demonstrated the real reason why a single standard of gold was preferred by the national banking money power. Gold, from its portability, could be more easily exported than silver, and large quantities of the former metal could be readily shifted back and forth between New York City and London as a means to create temporary panics, and thus afford the gold gamblers and stock, speculators opportunities to depress or raise the price of
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bonds, stocks, and securities whenever it subserved their interests.
In 1878, after the passage of the Bland-Allison law, Secretary Sherman authorized the sub-treasury at New York City to become a member of the Clearing House Association, whose membership consisted of sixty-six national banks of that city.
This association was the most powerful financial body in the United States, and it was the head and front of the money power.
This act of Secretary Sherman was an exceedingly shrewd move on his part to add an official sanction to the war that was to be waged against the use of silver and silver certificates by the Clearing House Association.
To afford a consecutive statement of the various financial measures of Congress, we must retrace our steps to the 16th day of January, 1878.
At and prior to this time a controversy arose as to whether United States bonds were payable in gold solely.
To set this question at rest forever, Senator Matthews, of Ohio, submitted a concurrent resolution in the Senate, declaring that all United States bonds issued under the Refunding Act of July 14, 1870, and the Resumption Act of January 14, 1875, could be paid at the option of the government in standard silver dollars of 412 1/2grains without violation of the public faith.
All proposed amendments were voted down, and the resolution was agreed to by a vote of 43 yeas to 22 nays.
On January 29, 1879, the House agreed to the resolu-
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tion in the form in which it came from the Senate by a vote of 189 yeas to 79 nays.
Divested of its preamble which merely recited the facts in controversy, the resolution is as follows: -
"Resolved by the Senate (the House of Representatives concurring therein), That all the bonds of the United States issued under the said acts of Congress herein before recited are payable, principal and interest, at the option of the government of the United States, in silver dollars of the coinage of the United States, containing 412 1/2grains each of standard silver; and that to restore to its coinage such silver coins as a legal tender in payment of said bonds, principal and interest, is not in violation of the public faith nor in derogation of the rights of the public creditor."
It is in force to this day as declaratory of the financial policy of the United States.
On December 9, 1878, Mr. Fort moved that the House suspend the rules and pass a resolution, declaring any discrimination against standard silver dollars by National Banking Associations a defiance of law, and instructing the Committee on Banking and Currency to report a bill for withdrawing their circulation.
The resolution received a majority, but not the necessary two-thirds vote, and it failed to pass.
The republican members of the House voted almost solidly against the resolution.
This resolution was brought forward in the House as a warning to the Clearing House Association of New York City, composed largely of national banks, for its refusal to accept silver dollars and silver certificates in settlement of balance due from the various banks.
Although the Bland-Allison law was in effect but a few months, the traitorous national banking money
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power at once begun a war upon the lawful money of the United States, and this was done with the open consent of the Secretary of the Treasury, who had made the sub-treasury at New York City a member of the Clearing House Association as an aid to the consummation of its schemes.
This action of the national banks in thus deliberately conspiring to nullify a law of the United States, gave origin to a warm debate in Congress, during which Secretary Sherman was severely criticized for giving official sanction to the acts of the associated banks.
During the session of the Fifty-first Congress, at which time Mr. Sherman was a member of the Senate, Senator Morgan, of Alabama, in a debate upon the money question, recalled this fact and asserted that the former had, while Secretary of the Treasury, been cognizant of the designs of the clearing house banks to refuse silver in payment of balances, and that those banks were emboldened to pursue that course by the acquiescence of the Secretary.
He proceeded to quote from a statement made by Mr. Weston, Secretary of the Monetary Commission of 1886, in which the latter said:
"On the 8th inst. [November, 1878,] a committee of these banks [New York Clearing House Association] had a conference at Washington with the Secretary of Treasury [Mr. Sherman], at which were present the Attorney-General and some minor officials.
"The result was a plan submitted by the banks on the 12th inst., and agreed to, only one bank representative (Mr. Colgate) objecting. The leading features of it, are first, that the banks will reject silver deposits, except as re-payable in kind; second, that silver shall not be allured as clearing house money except
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for small fractional earns not exceeding $10; and third, that in respect to all payments by government drafts on the New York banks or on the United States assistant treasurer at New York, they shall be cleared at the clearing house in New York, at which a desk is to be assigned to a representative of the United States Treasury. At the bank meeting on the 12th Mr. Colgate objected to the plan, that it could only mean 'To fly in the face of Congress and to declare the silver dollar that has been declared a legal tender to be worthless."
In spite of the immense power of the banks, aided by the official power of Secretary Sherman, to discredit the legal tender silver dollars and silver certificates, Congress, at its very next session, after this exposure of the conduct of the Clearing House Association and that of Secretary Sherman, passed a law requiring that no national bank should become a member of any clearing house, or exercise any privilege therein to any kind whatever, unless it agreed to accept silver on deposits and receive silver certificates as money through which the balances might be settled.
Although the organized banks still continued their aggressions upon the rights of the people, and although they exerted their utmost power to degrade the silver dollar and its representative, this money became so popular with the people that they exchanged gold coin for silver certificates at the Treasury of the United States.
This exchange of gold coin for silver began in November, 1880, and continued until the Treasury made a gain in gold aggregating $78,000,000.Thus the absurd predictions set forth in the veto message of President Hayes, and echoed by the senseless clamors
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of the national banks, were answered by the common sense and patriotism of the people of the United States.
In 1878, the year that the Bland-Allison bill became a law, the number of failures were 10,478, with liabilities of $284,383,000; in the following year of 1879 the list of failures were only 6,658, with liabilities of $98,149,000- a remarkable decrease.
According to the provisions of the Resumption Act of 1875, greenbacks were redeemable in specie on and after the 1st day of January, 1879. Prior to this time greenbacks and United States notes were on a parity with gold, and hence on May 31, 18788, Congress enacted a law forbidding the further destruction of these legal tenders, and the Secretary of the Treasury was authorized to re-issue them for the payment of demands against the United States. Senator Thurman introduced this bill in the Senate, and against the combined opposition of the national banks, secured its passage through Congress, thus preserving this currency to that amount.
In the meantime, however, prior to January 1, 1879, Secretary Sherman issued a circular to the collectors of the various ports throughout the United States, directing them to receive United States notes and Treasury notes in payment of duties on imported goods.
The act of July ll, 1862, which provided for the issue of Treasury notes, prohibited the Secretary of the Treasury from receiving them for duties on imports.
Nevertheless Secretary Sherman, by a mere executive order, nullified this part of that act by ordering the collectors of custom duties to receive them. This order made the Treasury notes, in this respect, the equal of gold.
The object of the Secretary in adopting this policy
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excited considerable discussion in Congress, but the order was acquiesced in by the people, for the reason that the discrimination so long exerted against the greenback was withdrawn. The government honored its own currency by receiving it for taxes-the best form of redemption ever adopted by a nation.
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CHAPTER VI.
THE NATIONAL BANKS WAGE WAR UPON THE CREDIT OF THE UNITED STATES.
"The wisdom of the Whole nation can see farther than the sages of Westminster Bell. The collective knowledge and penetration of the people at large are more to be depended on than the boasted discernment of all the bar. The reason is clear: Their eyes are not dazzled by the prospects of an opposite interest. The Crown has no lure sufficiently tempting to make them forget themselves and the general good." Edmund Burke.
The profoundest thinkers upon the subject of free government have always maintained that the common people are inspired by nobler sentiments of justice than that select class who arrogate to themselves all virtue and knowledge.
History has affirmed, time and again, that the collective - wisdom of the people is the safest guide for a nation.
The celebrated Edmund Burke, in that splendid defense of Woodfall, the publisher of the letters of Junius, goes so far as to declare, in the august presence of the highest court of England, that the sense of justice prevalent among the common people is truer than that entertained by those learned in the law.
The reason why the common people seldom err in their instincts of justice is, that they are not the highly favored subjects of special privileges, and that they are not continually seeking unearned advantages over their fellow men.
On the other hand the moving reason why the
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wealthy, privileged, and aristocratic portion of mankind is not animated and governed as largely by the plain principles of justice, as the great majority of common people, is very apparent, as it is an established fact that the possession of great wealth and privileges render its possessors eager for added accumulations, and this results in a selfishness from which springs by far the larger part of the unnecessary evils of government.
With this latter class the desire of heaping up great wealth develops into a controlling passion - in many cases it degenerates into a mania.
This observation is true of the national banking money power. Notwithstanding it received a gift of the most valuable and profitable franchises ever conferred upon organized capital, it was continually demanding new concessions at the hands of Congress. It was insatiable.
This money power persevered in its vindictive warfare against the people, its subsidized press publicly threatened Congress with a visitation of wrath, and it utilized its control of the currency to oppress.
It asserted that the country needed a king, and that a strong government should be erected upon the ruins of American liberty.
The national banks continued their opposition to the coinage of silver, but without avail.
On April 16, 1879, the Committee on Coinage, Weights, and Measures, by Hon. A. H. Stephens, of Georgia, reported House bill No. 4, which provided that fractional silver coins should be a legal tender for any sum not exceeding tea dollars in any one payment.
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On April 19, 1879, Mr. Springer moved an amendment to the third section of the bill, increasing the legal tender debt-paying power of fractional silver coin to twenty dollars in any one payment.
The bill so amended in its third section passed the House on the 22nd day of April, 1879, and it was transmitted to the Senate, where, on May 28th, an amendment offered by the Committee on Finance was adopted, striking out the word "twenty" and inserting the word "ten" in lieu thereof.
The bill thus amended passed the Senate, was concurred in by the House, and became a law June 9, 1879.
The effect of this measure increased the legal tender power of fractional silver coins from five dollars to ten.
On the same day the House passed a bill providing for the exchange of trade dollars for legal tender standard silver dollars.
It was sent to the Senate but that body buried it by a reference to the Finance Committee.
Had this proposed measure been enacted into law, a. large volume of full legal tender silver dollars would have been added to the circulation, increasing the amount of money at least thirty millions, and it would have removed a large mass of non-legal tender trade dollars as a disturbing clement in the silver market.
The national banks opposed this bill, and hence it was smothered in the republican Senate.
On June 27, 1879 Mr. Vest, of Missouri, offered the following resolution in the Senate: -
Resolved by the Senate (the House of Representatives concurring), That the complete remonetization of silver, its full restoration as a money metal, and its
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free coinage by the mints of the United States are demanded alike by the dictates of justice and wise statesmenship."
On June 30th this resolution was referred to the Committee on Finance on motion of Mr. Allison, by a vote of 23 yeas to 22 nays.
This resolution was never reported from this committee back to the Senate.
One singularity which will attract the attention of the reader is, that every measure adopted by the House providing for the restoration of silver, was, on reaching the Senate, uniformly referred to the Finance Committee, from whence it never returned.
As it was then constituted, the Finance Committee was composed largely of Eastern Senators, and this fact affords an explanation of the wonderful facility with which this committee nullified all efforts of the House for remedial legislation.
In the meantime Secretary Sherman was administering the Treasury Department with a view of throwing discredit upon the silver coinage, and he persisted in the policy of refusing to pay out silver dollars, except where specific demands were made for that money. His object in following out this line of policy, aimed at a largo accumulation of silver dollars in the Treasury, and this condition would supply him with arguments to convince Congress, if possible, that no one desired silver as money. This intention was evidenced by a communication to Congress by him, in which he requested an appropriation for the construction of additional vaults for the storage of standard silver dollars.
At this period United States bonds were at a very
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high premium, and this fact led to a severe contraction of the currency by the national banks.
It will be remembered that the original National Ranking Act of February 25, 1863, provided for a distribution of circulating bank notes, and as a consequence of that provision the power to suddenly contract or expand the volume of circulating notes was withheld from the banks.
This salutary provision was repealed by section 4 of the act of June 20, 1874, which authorized the national banks at any time, and for any reason which they chose to consider sufficient, to deposit United States notes and treasury notes to secure their circulating bank notes, and contract the currency to the extent of the substitution of government legal tenders for the bonds deposited as security by the national banks; these banks then withdrew their bonds and sold them for the high premium which they then commanded.
This power conferred on the national banks, by which they could contract the volume of currency, was a standing menace against the prosperity of the country; and armed with this destructive weapon they could, without any notice to the people, prostrate every industry in the country.
The extent to which this sudden contraction and expansion was practiced by the banks was clearly stated in a report made by Mr. Gilfillan, United States Treasurer, for the year 1880. Sir Gilfillan says: -
"Under the construction placed upon the lair, banks which have thus reduced their circulation have been permitted to increase it again as often and as largely as they chose, whether their legal tender deposits were exhausted or not. An example will better illustrate these operations. In January and February,
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1875, a certain bank reduced its circulation from $308,490 to $45,000 by deposits of legal tender notes. Between September 26, 1876, and May 26, 1877, and before that deposit was exhausted, it increased its circulation to $450,000.Between August 14th and September 10, 1877, it again reduced its circulation to $45,000. On September 19, 1877, nine days after completing the deposits for this reduction, it again began to take out additional circulation, although $402,550 of prior deposits remained in the Treasury, and by the 26th of that month its circulation had again been increased to $450,000. July 22, 1878, it, for the third time, reduced its circulation to $45,000 and in August and September, 1879, again increased it to $450,000, at which it now remains, the balance of its former legal tender deposit then in the Treasury being $112,615."
This report exhibits the dangerous power placed in the hands of the national banks to unsettle values, disturb business, and inflict panics whenever it was to the interests of the national banking money power to exhibit their strength over the legitimate business of the people.
Mr. Gilfillan further says: -
"No one will contend that this was a legitimate and proper method of conducting business under the national banking system, and yet it can be resorted to every-day by every bank in the United States as long as the fourth section of the act of June 20, 1874, remains unrepealed. It disturbs values, affects the money market, and subjects the government to unnecessary expense, merely to gratify a spirit of speculation and gain on the part of the managers of the bank, and it ought to be peremptorily forbidden in the future."
This last extract clearly demonstrates that it was in the power of the thousands of national banks to effect a combination, or trust, for the contraction of the
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volume of currency whenever such policy would be decided upon by them to influence the legislation of Congress.
During 1880 and 1881, a large amount of the national debt would fall due, and provision must be made for the payment of bonds aggregating $800,000,000. These bonds bore interest at the rate of 4, 4 1/2 and 5 per cent per annum.
During the session of 1879, Representatives Garfield, of Ohio, and Wood, of New York, both introduced bills in the House, providing for the exchange of these maturing obligations for bonds bearing four per mat. interest, and running from twenty to forty years. These bills were referred to the appropriate committee, wherc they remained until the latter part of 1880.
After the presidential election of that year the committee reported a substitute for the Wood bill, providing for the funding of these maturing bonds at three and one-half per cent interest, and running from ten to forty years.
A strenuous effort was made to push this bill through the House, but it was not successful, and it was amended by that body, mating the bonds redeemable at the option of the government after the expiration of Five years from their date of issue, and the rate of interest was reduced to three per cent per annum.
The bonds were to be sold by public subscription, at not less than par, and no contract or awkward of these bonds should be made by the Secretary of the Treasury to any syndicate, or bankers, or otherwise, until after the expiration of thirty days from the date of the announcement that public subscriptions would be opened for the sale of said bonds.
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The Secretary was authorized to designate banks to receive subscriptions for bonds so offered.
Section g of this Pending Act was as follows: -
"From and after the 1st day of July, 1881, the three per cent bonds authorized by this act shall be the only bonds receivable as security for national bank circulation, or as security for the safe-keeping and prompt payment of the public money deposited with such banks: Provided, That the Secretary of the Treasury shall not have issued all the bonds herein authorized, or so many thereof as to make it impossible for him to issue the amount of bonds required: And provided
further, That no bond upon which interest has ceased shall be accepted or shall be continued on deposit as security for circulation or for the safe-keeping of the public money; and in case bonds so deposited shall not be withdrawn, as provided by law, within thirty days after the interest has ceased- thereon, the banking association depositing the same shall be subject to the liabilities and proceedings on the part of the Comptroller provided for in section 5234 of the Revised Statutes of
the United States: And provided further, That section 4 of the act of June 20, 1874, entitled 'An act fixing the amount of United States notes, providing for a redistribution of the national bank currency, and for other purposes, be, and the same is hereby, repealed; and sections 5159 and 5160 of the Revised Statutes of the United States be, and the same are hereby, reenacted."
This section was by far the most important part of the funding bill, and its provisions aimed to curtail the immense powers of the national banks. It required them to substitute the new three per cent bonds, authorized by this bill, as security for their circulating notes, in lieu of the maturing bonds
The feature of this measure which the national banks regarded as the most dangerous to their existence, was
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in that part of the bill which made the bonds redeemable, at the option of the government, after the expiration of five years from the date of their issue.
This would place the power in the hands of the government to discipline the national banks whenever these corporations would refuse to obey the lairs, or conspire against the interests of the people. The bonds being redeemable, at the option of the government, after the expiration of five years, the latter could at any period after the lapse of the minimum time, call in those bonds deposited by the national banks to secure their circulation, and thus eventually rid the country of this gigantic money power.
Furthermore, this section would not permit national banks to deposit bonds, upon which interest had ceased, to secure their circulating notes. Neither would it allow them to continue bonds on deposit upon which interest had ceased. Were it otherwise, the national banks could perpetuate their existence against the will of the government, by continuing on deposit bonds that were past due. In case of failure on the part of the banks to withdraw their bonds which were due, and upon which interest had ceased, within thirty days after these bonds matured, the Comptroller of the Currency was authorized to call in the circulation of those banks refusing to obey this provision, and wind up their affairs according to the provisions of section 5,234, of the Revised Statutes of the United States.
Furthermore, the unlimited power of the banks to contract or expand the currency conferred upon them by section 4, of the act of June 20, 1874, was taken away by the pro re-enactment of sections 5,159 and 5,160 of the Revised Statutes of the United States.
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The reenactment of these two sections would place the control of the circulating bank notes in the hands of the Comptroller of the Currency.
When this three per cent funding bill was before the House, the greatest pressure was brought to bear upon that body by the combined efforts of the national banks to secure the defeat of the measure. The halls of Congress swarmed with the agents, lobbyists, and attorneys of the money power who attempted to intimidate Congress and defeat the bill. Threats were openly made by these venal scoundrels, that, unless the measure was withdrawn, the national banking money power would punish the country by indicting a monetary panic upon it.
The New York Tribune, the leading organ of this money power, thus described the vast power of the banks of the East, and hinted at its possible exercise. It said: -
"The time is near when they (the banks) will feel compelled to act strongly. Meanwhile a very good thing has been done. The machinery is now furnished by which, in any emergency, the financial corporations of the East can act together on a single day's notice with such power that no act of Congress can overcome or resist their decision."
In its zeal to serve the purpose of the financial corporations of the East, it exposed the traitorous sentiments of the financial magnates of New York City. It said: -
"It is astonishing, yea, startling, the extent to which faith prevails in money circles in New York that we ought to have a king."
The banks of the East, in their efforts to coerce Congress into submission, at once commenced a rapid
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contraction of the currency during the time the bill was under consideration by the House.
In the short period of thirteen days, the banks of New York City surrendered their circulating notes to the extent of $18,722,340 and conspired to precipitate a panic upon the country, with its accompaniments of bankruptcy, financial ruin, and suffering.
This concerted action of the New York banks produced such a flurry in the money market, that prices fell five, ten, and fifteen per cent in a fear moments; and interest at the rate of 472 per cent per annum was exacted for the use of money by these infamous conspirators against the human race.
The situation in Net York City became so acute, that the Secretary of the Treasury relieved the condition of the people by purchasing a large amount of bonds, and thereby increasing the volume of money by many millions; while the Canadian banks forwarded $8,000,000 to be thrown on the money market.
This course of the banks led to severe denunciation of their policy in Congress
In a speech in the House on the 1st of March, 1881, Hon. John G. Carlisle, strongly arraigned the New York banks as the bitterest enemies of the government and the people; he said: -
"But, Mr. Speaker, by far the most dangerous feature yet introduced into the national banking system is contained in that part of the fourth section of the act of June 20, 1874, which authorizes the banks at any time, and for any reason which they may choose to consider sufficient, to deposit lawful money with the Treasurer, contract the currency to that extent and withdraw their bonds; and, sir, it is not going too far to say that until this feature is wholly eliminated or
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materially modified there can be no assurance of safety to any legitimate investment or business enterprise in this country. If there was ever a doubt as to e dangerous character of the power which this part of the law gives to the banks over the business and property of the people, the arbitrary and unjustifiable proceedings of the last week ought to dispel it forever. The power was conferred in the first instance, as I have said, for a special and temporary purpose, the equalization of the national bank circulation, but when the Resumption Act of January 14, 1875, was passed, which removed all restrictions as to the amount of such currency and made the system entirely free, there was no longer any necessity for this clause, and it should have been instantly repealed. It is a standing menace against the prosperity of the country. Armed with this destructive weapon the banks may at any time, without a moment's notice or a shadow of provocation, strike down every industry and every commercial enterprise of the people.
"The banks, or some of them at least, first began to pervert this section of the statute from its original purpose and abuse the power which it conferred upon them by depositing lawful money and withdrawing their bonds from time to time, in order to speculate upon them in the market They thus withdrew large amounts of their circulation and contracted the currency, not because the reduced demands of business made the outstanding volume of circulation unnecessary or unprofitable, but simply because they wanted to realize the high premiums on their bonds and speculate in the securities upon which the Government had already delivered to them go per cent. in notes. These notes would be left outstanding for the time being, but an equal amount of Treasury notes would, of course, bc withdrawn from circulation and held at the Department to redeem the bank notes as they might come in. The Treasurer, in his last annual report, describes this process by reference to actual transactions in his office; and as his statement on this subject cannot be con-
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densed without impairing its force, I give it in his own words."
After quoting from the report of 1880, made by Treasurer Gilfillan, Mr. Carlisle continued: -
"Under this section the banks have it in their power to contract the currency and produce financial distress, involving every interest in the country and embarrassing the operations of the Government itself, whenever they may think it will promote their special interests to do so. If they do not like proposed-legislation in Congress or elsewhere; if they are opposed to the success of a particular political party; if they conclude that they ought to be exempt from all taxation, State and Federal; if they want additional privileges conferred upon them in respect to any matter connected with their business; in short, if their opinions and interests are not consulted in all cases whatsoever, they can resort at once to this tremendous power over the fortunes of the people and thus bring the timid to terms and ruin all who refuse to accede to their demands. A plausible pretext can always be found or invented for the exercise of such a power as this, and powerful influences can always be brought to justify and sustain it.
"The two Houses of Congress, representing the aggregate interests of fifty millions of people, have, after mature deliberation, passed a bill which the banks have chosen to consider obnoxious to them, and forewith - within thirteen days - they have contracted the currency to the extent of $18,722,340 and precipitated a crisis which would have been disastrous to the country had it not been met by measures which they had no power to prevent. The prompt action of the Secretary of the Treasury in purchasing a large amount of bonds at the city of Net York, and the course of the Canadian banks in throwing seven or eight million dollars of their loanable capital on the market, alone prevented a catastrophe from the effects of which we might not have entirely recovered for many years.
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"When Secretary McCulloch, several years since, in pursuance of his contraction policy, began to retire and cancel legal tender notes at the rate of $4,000,000,000 per month, it produced such consternation in business circles that Congress was forced to intervene at once and arrest the process by the passage of a joint resolution; bat now we have seen nearly $19,000,000 of circulation withdrawn in less than half a month, not by the Government, but by institutions in the management of which the Government has no voice, and still gentlemen here insist that the power under which this has been done, and under which it may at any time be repeated, shall not be taken away. Why, sir, the whole contraction of legal tender Treasury notes under the provisions of the Resumption Act, from January 14, 1875, to May 31, 1878, when it was prohibited by 1aw, was only $34,318,984 not twice as much in more than three years as the bank contraction had been in less than two weeks.
"This experience warns us that we cannot safely permit this great power to remain in the hands of these institutions unchecked by legal restrictions. It is an engine of destruction standing in the very narrowest part of the way to permanent industrial and commercial prosperity in this country; for there can be no such prosperity anywhere, in the midst of sudden and enormous contractions of the currency; nor will prudent and experienced business men embark in large and expensive enterprises when the power to make such contractions is hold by private and interested parties
who acknowledge no restraints except public sentiment and their own views of the public welfare.
"By law the volume of legal tender notes is limited to $345,681,016, while under the policy of the Government nearly $150,000,000 in gold and silver coin are permanently withheld from circulation and hoarded in the Treasury. Of the $454,000,000 gold coin in the country the Government and the banks held, on the 1st day of November last, $254,000,000, and the people
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only $200,000,000. The circulation of State banks is taxed out of existence; the coinage of silver is limited by statute to $4,000,000 per month; and so it appears that by statute or public policy every form of currency which the people can use in the transaction of their business is restricted, except national bank notes. They alone are perfectly free from all restrictions, legal or otherwise, and upon them the people are compelled to rely under existing circumstances for the additional facilities of exchange necessary to enable them to carry on their growing industries and conduct their rapidly increasing commercial enterprises.
"What a fatal policy it is, in view of these considerations, to retain on the statute book as part of our currency system a 1am which subjects all these great interests to the arbitrary will or mistaken judgment of two thousand corporations."
The dangerous powers conferred upon the national banks were so clearly pointed out by Mr. Carlisle in his magnificent speech that the bill passed the House by a decisive vote.
In the meantime, the policy of the banks in making war upon the public credit received criticism from many journals which were friendly to the national bank system.
We will quote a few extracts: -
"It is a question whether a clique of banters is to dictate to Congress and the country what is for the best interest of the country, and to manipulate the money market in order to depress the stock market." - New York Advertiser.
"It is rule or ruin with the national banks. When Congress gets down on its honorable knees to the national banks everything will be lovely. Fattening on the Treasury for years, the national banks have entered into a conspiracy to wreck the business of the country rather than submit to what they consider
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unfavorable legislation. The people will remember this against them, and the day of reckoning is not as far off as they imagine."- Chicago News.
"Some of the national banks of this city have played a very contemptible part in the flurry of yesterday and to-day. It is not the first time that they have acted in this way against the public credit. In one instance, which we do not care to name at present, but which will be understood by most Wall street people, the want of loyalty to the public credit has shown itself on all occasions, from the outbreak of the civil war in 1861 down to the present time." - New York Commercial.
"It is understood that there is to be an amendment offered in the House to the bill providing for the issue of greenbacks to take the place of bank circulation that may be withdrawn. If this sensible precaution is taken it will instantly restore confidence and take permanently away from the banks this fearful power to withdraw in one day all their bills from circulation, or, what is worse, lock op an equal amount of gold and legal tenders and leave the street utterly without means of doing business. Such terrible power no set of men should for one instant possess."- New York Graphic.
The New York Tribune uttered the following implied threats against Congress should the bill pass. It said: -
"The country knows that it has escaped a great disaster. Everywhere there is a feeling of intense relief and thankfulness, as substantial people come to realize how terrible a revulsion the enactment of the Carlisle section would have caused. But it is not well to forget that the danger has been escaped only upon condition that the fatal section is defeated. If Congress or the President is led to believe that disaster has been and can be averted by any action of the Treasury Department, so that the pending bill can now be passed without causing a great calamity, the consequences of that
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error may be incalulably disastrous. Let the situation be fully understood."
The toryism of the Tribune always shone forth conspicuously when it defended the lawless banks of New York City.
"The trade and general business of the country has been subjected to a strain during the past week more severe than any which has been put on them since 1873. This deplorable state of affairs was brought about by the selfish conspiracy of a certain number of national banks bent on opposing the national will in the matter of establishing a lower national rate of interest by such duly chosen representatives of the people of the United States as they have thought proper to adopt. Our Government and people who maintain it have submitted to great sacrifices to afford all reasonable support to national banks But the banks have not kept within the reasonable limits of their demand for compensation for such financial services as they have been able to render the country.
"A few of these banks have not hesitated to invite the destruction of the whole system and provoke popular anger by pursuing a course which must inevitably force on American citizens the question whether legislative and executive officers chosen to represent the people or a few bank officers are to administer the financial destinies of this country. It is not probable the natural resentment of the legislature against the attempted conspiracy will extend to the condemnation of the whole national system. But we have no doubt at the same time that when the indignation has cooled off, those conspirators against the prosperity and credit of the Republic will be subjected to such temperate and wholesome discipline as shall be a warning to them and their kind for years to come." - New York World.
"It strikes as that the gentlemen in Wall street, who are trying to prevent the Senate Funding Bill from
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becoming a law, rather make a mistake. Undoubtedly they have a right to express their opinions about the bill, but when it comes to threatening that, unless it is modified to meet their viewers, they will wreck the trade of the entire country, they go a step too far. The average Congressman has no such fear of banks and bankers as to make him alter his vote to avoid their displeasure, and as to any possibility of the mischief they may do, he will soon find a may to prevent it. If the officers of the banks should attempt, as some foolish men here say they will do, to withdraw their circulation unless certain provisions in the bill are stricken out, it would be very easy to supply the deficiency with an additional issue of greenbacks, and if they try by underhand means to thwart the negotiation of the new bonds because the rate of interest is not high enough to please them, they can be deprived of the privilege of issuing circulation altogether.
"It is a dangerous thing for the tail to attempt to wag the dog, for if the dog gets angry he can switch the tail about in a very unpleasant may for the tail. The truth is, that in matters of national interest there is no set of le as stupid as the Wall street financiers. Absorbed in the business of buying and selling stocks and lending money, they only consider what immediately effects to-day's markets, without a foresight of the future or regard for what is going on elsewhere. In the present case they are evidently in blissful ignorance of the general hostility of the people of the West and Southwest to the national bank system and the slender thread of toleration on which it hangs. It needs only a good pretext to secure the sweeping of the whole thing out of existence, and the substitution for it of any exclusive national currency. That pretext all the Wall street banters seem bent on furnishing, and Washington will, we fear, bc only too glad to seize upon it." - New York Sun.
On March 1, 1881, the Chicago Express, which opposed the pretensions of the national banks, editorially spoke as follows: -
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"The funding bill, as it passed both Houses of Congress, was, in the language of a Washington dispatch, 'The most serious blow the national banks ever received from Congress since the organization of the national banking system."
"The act of January, 1875, clothed the national banks with the power of unlimited and unrestricted contraction and expansion of the currency. It gave them absolute control over the volume of money, and consequently over the market value of labor and all kinds of property. It- gave them power to inflate the currency when they could make money through the inflation of prices, and when their interests could be better served by panic, depressed prices and general business stagnation and bankruptcy, they had power to accomplish their end through the contraction of their circulating notes.
"The provisions of the new funding bill materially interfere with their nicely-planned scheme, and deprive them of nearly all their power over sudden contractions and inflation. It puts a limit to their privileges, and bounds to their unwarranted powers.
"Without waiting even for the concurrence of the House in the slight Senate amendments, a large and powerful bank lobby from Wall street and the clearing house association at once bore down upon the White House armed with magazines, Gatling guns and infernal machines of dire calamities, which they threatened would surely explode in the very heart of the nation's business and industries from spontaneous ignition, in case he did not intense his prerogative to save. They were armed with authority from the national banks represented by the American Bankers' Association to inform his Excellency that in case he withheld his veto they would immediately retire their circulation, in which case a money stringency would follow which could be terribly disastrous to every business interest producing the most ruinous financial crash which ever befell the country."
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Senator Plumb, who was one of the three republican Senators that voted for the bill, stated his opinion as follows: -
"I am a national bank president, so I can speak without prejudice. I tell you the crisis has come when we shall see whether the banks run the Government or the Government the banks. I think the Government has a right to fix the rate of interest it will pay, and it is no business of any set of men. It makes no difference to the people if Wall street gamblers do lose money, or railroad stoics stop rising. It would make a difference if the hoes in western cornfields should stop, and it is with the producers that the prosperity of the country rests. Let the bottom fall out of it if it will. It is an artificial movement to coerce the Government."
The funding bill passed Congress, and was presented to President Hayes, who, on March 3, 1881, returned the bill to the House of Representatives with his veto, accompanied by a message stating his objections to the measure.
The following extracts from the message will give the reader a correct opinion of the influence that forced the President to veto this measure, which was the result of the matured labor of Congress. The President says: -
"While in my opinion it would be wise to authorize the Secretary of the Treasury, in his discretion, to offer to-the public bonds bearing 3 1/2 per cent interest in aid of refunding, I should not deem it my duty to interpose my constitutional objection to the passage of the present bill if it did not contain in the fifth section provisions which, in my judgment, seriously impair the value, and tend to the destruction of the present national banking system of the country.
"This system has now been in operation almost
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twenty years. No safer or more beneficial banking system was ever established. Its advantages as a business is free to all who have the necessary capital It furnishes a currency to the people which for convenience and the security of the bill holder has probably never been equaled by that or any other banking system. Its notes are secured by the deposit with the government of the interest-bearing bonds of the United States."
Further on in his veto message, President Hayes makes vigorous objections to section g of the act, on the grounds that it jeopardized the existence of the national banks, and there would be no inducement for the organization of additional ones.
He says: - "In short, I cannot but regard the fifth section of the bill as a step in the direction of the destruction of the national banking system."
Again he says: - "Under this section it is obvious that no additional banks will hereafter be organized, except, possibly, in a few cities or localities where the prevailing rates of interest in ordinary business are extremely low."
The extreme solicitude manifested by the President for the national banks is apparent.
Thus the timid Hayes quaked before this august banking monopoly, and vetoed this beneficial measure at the insolent command of an organized clique, whose greed was not even satiated with 472 per cent usury.
Furthermore, this bill would have resulted in a saving to the Government of many millions per annum by a reduction of the rate of interest.
It will subsequently appear that these bankers who threw the country into a state of panic; who threatened Congress; who forced the weak Hayes to veto this
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bill; who wanted a king, mill, in the near future, constitute themselves the special guardians of that most sacred object - the public credit!
These conspirators, who prevented a reduction in the interest on the public debt, will, in a few years from this period, assume the championship of the public faith!
In the meantime, that powerful ally of the money power, the Secretary of the Treasury, was throwing the weight of his official influence against the silver dollar.
In one of his reports to Congress, he makes the following recommendation with reference to the silver dollar; he says: -
"The Secretary believes that all the beneficial results hoped for m a liberal issue of silver coin by issuing this coin, in pursuance of the general policy of the act of 1853, in exchange for United States notes, coined from bullion purchased in the open market, by the United States."
An analysis of this recommendation, in view of the resumption act of 1875, will illustrate the enmity of Secretary Sherman toward the use of silver as a standard money.
First, He would limit all silver coins, whether dollars or otherwise, as a legal tender, to the amount of five dollars. Second, With this limited legal tender silver coin he would redeem and retire the United States legal tender notes. Third, He would redeem said silver coin in what? - In gold. And that would be the sole redemption money.
This policy of the Secretary aimed at the complete withdrawal and cancellation of $346,000,000of legal
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tenders, by a redemption in silver coin, the latter redeemable in gold.
This scheme of contraction would be followed by continual issues of bonds to secure gold for a redemption fund for this silver.
It will be noticed that this man, who was so anxious to mate United States notes and silver coin redeemable in gold, never, during his public career, once intimated that national banks should redeem their circulating notes in gold.
In 1880, Secretary Sherman again inflicted one of his usual recommendations on Congress, asking for the passage of a law to prohibit the further coinage of silver.
We quote his exact language in which he avers: -
"First, It is too bulky for large transactions, and its purpose is confined mainly for payments for manual labor, and for market purposes for change. The amount needed for these purposes is already in excess of the probable demand.
"Second, It is known to contain a quantity of silver of less market value than the gold in gold coin.
"This fact would not impair the circulation of such limited amount as experience shows to be convenient for use, but it docs prevent its being held or hoarded as reserves, or exported, and pushes it into active circulation, until it returns to the Treasury, as the least valuable money in use.
"For these reasons the Secretary respectfully but earnestly recommends that the further compulsory coinage of the silver dollar be suspended."
The phrase "compulsory coinage" clearly indicates the hostility of the Secretary toward silver.
An examination of his reasons, urging the suspension of the coinage of the silver dollar, furnishes the strongest argument against his position.
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In the first place, the silver dollars are too heavy for 1arge transactions, therefore this fact places them beyond the control of the national banking money power.
The gold gamblers and bullion brokers of Wall street found it difficult to obtain control of those coins whose largest denominations were one dollar pieces.
At the very time that Secretary Sherman urged this objection against the silver dollar, the inconvenience, if any, of its she and weight was obviated by the issuance of silver certificates in denominations of from ten to one thousand dollars.
He says that it was the money of small transactions, such as the payment of wages to labor, and the purchase of provisions.
This is one of the strongest reasons that could be advanced for the continued coinage of the silver dollar. This money that paid the wages of labor was worth one hundred cents on the dollar.
Again, he says that it was of less market value than the gold in the gold dollar. This is true of it as a mere commodity, but as a legal tender, a medium of exchange, it was the equal of gold anywhere on the face of the earth.
But the true animus of the Secretary against the silver dollar sprung from the fact that it was not held, or hoarded, or exported, but that it was in active circulation.
This is the first time that an American Secretary of the Treasury advocated a theory as absurd as the one urgent by Mr. Sherman.
The principle upon which a true monetary system is based is that of circulation.
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Mints are not established to coin money for the purpose of hoarding it up in the vaults of banks. It performs its true functions when it passes from hand to hand in exchange for the commodities and necessaries of life.
One hundred and fifty years ago the celebrated historian and philosopher, David Hume, in speaking of the effects of hoarding money, said: "As regards prices, money locked up in chests is as if it were annihilated."
He says, "It is not exported."
Just why Secretary Sherman desired a coin that can be readily exported to some foreign country, is not stated by him in his report and recommendations to Congress.
The objections urged against silver because of non-export of that coin, shows that it could not be readily shipped and re-shipped across the Atlantic, at the nod and beck of the stock gamblers, bullion brokers and panic breeders of the New York clearing house and London.
The Secretary said, "It is in active circulation."
This constitutes no crime on the part of silver. All money is coined or issued to subserve the purposes of man by being thrown into active circulation as a medium of exchange.
These weak and puerile reasons of Secretary Sherman against the continued coinage of silver dollars had no effect upon Congress. They were contemptuously ignored by that body.
The childish spite exhibited by Secretary Sherman against silver, his petty slanders against the standard dollar, and his slavish devotion to the traitorous money
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power, disgusted many of the best men of the party to which he belonged; and, on March 30, 1880, the Chicago Tribune administered a stinging rebuke to his policy. It said: -
"Since the passage of the silver law Mr. Sherman has done everything to disparage silver; he has limited the coinage to the minimum; he refused to exercise the Government's option to pay out silver in any considerable amounts; he has restricted the issue of silver certificates; he made the Treasury Department a member of the New York Clearing House, from which silver is excluded; and has by word and letter and act done all in his power to discourage the use of silver in the United States."
The Tribune denounced his truckling policy on the financial question in the following language:-
"At the opening of the present Congress he made the extraordinary recommendation that Congress strike from $350,000,000of the greenback currency of the country its legal tender character. It was a high bid for the support of Wall street, but a fatal one addressed to the producing and industrial classes of the country."
In the same editorial the Tribune says: -
"It is highly improbable that Mr. Sherman would receive an electoral vote from any State between the Alleghany and Rocky Mountains upon the issues of abolition of silver money and demonetization of greenbacks which would involve a contraction of the own and paper legal tender currency exceeding $400,000,000 which mould produce ruin to every industrial interest and every legitimate enterprise."
The public career of John Sherman is the most remarkable in the annals of the nation.
When a young man, he turned his attention to the profession of the 1aw, in which he earned but meager fame and fortune. At this time he was a compar-
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atively poor man. After a brief, or rather briefless experience as a lawyer, he determined to enter public life and was elected to the Thirty-fourth Congress in 1854.After serving in the lower House until the outbreak of the war, he was elected to the United States Senate. During the fore part of his career in that body, he served as Chairman of the Committee on Finance, the most important and influential position that can be conferred upon a member of the Senate.
He is the author of the present system of national banks, and he has left his impress upon the various financial measures of the Government from 1861 to 1875.
On the accession of Hayes to the Presidency, he was appointed Secretary of the Treasury at a salary of $8,000 per annum.
During his term of office at the head of that great department, he was a firm friend of the national banking money power which continually waged a war of extermination upon the currency of the United States.
As Secretary of the Treasury he executed those great funding operations, by which it was alleged the people had been saved a vast sum in interest, notwithstanding the singular fact that, during his incumbency, the national banks persuaded President Hayes to veto the funding bill, which reduced the rate of interest upon the national debt.
During these funding operations, he selected various national banks as depositories for the money received from the sale of bonds. One of these banks was known as the First National, situated on Broadway, in New York City. It had a capital of $500,000 and occupied offices that were humble compared with the palatial
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quarters of the great financial institutions of that city. According to the sworn statement of the officials of this bank, its total capital was $500,000 on the 31st day of December, 1879; on January 1, 1878, the undivided profits, after the payment of dividends, were $142,670; on April 4th of the same year the undivided profits were $339.095.60;on June 14th, after the lapse of two months, the undivided profits were $679,018.88; on October ad, these profits reached the sum of $804,-511.26; on December 12, 1878, they were $267,700.84. The amount of dividends paid by this bank to its stockholders, during this time, has never been ascertained or disclosed, bet that it was very large admits of no doubt.
Here is a single national bank, the special protege of Secretary Sherman, that, in the short space of ten months, accumulated undivided profits which exceeded its capital stock by more than three hundred thousand dollars.
On January 1, 1878, this pet bank of the Secretary was the custodian of Government funds amounting to $24,759,948.50. On April 4th, of the same year, it held Government funds amounting to $69,927,704.43; on June 14th, those deposits were increased to $128,109,071.04; on October 2d, they were $3,601,550. It was from these deposits of Government funds that the bank accumulated those enormous undivided profits. Why this comparatively small bank should be made the depository of Government funds to two hundred and fifty-six times its capital has never been explained by Secretary Sherman.
At this time, the sub-treasury of the United States was situated in the same sty as this pet bank, and
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could have been utilized as a depository for this money. It will be seen that this bestowal of official favor upon this bank was worth the immense sum of twenty-one thousand dollars per day.
The figures with reference to the amount of undivided profits of the bank, and the amounts of public money deposited therein, are taken from the report of the Comptroller of the Currency for the year 1880.
On January 1, 1880, Senator Beck, of Kentucky, called the attention of the Senate to these astonishing facts, and in the course of his speech said: -
"I came to the conclusion, looking over these statements, that the best banking capital a man can have is the good will of the Secretary of the Treasury. Suppose the Senator from New York were the best banker and I were to go to him and say, 'I want to go into partnership with you,' and the Senator should say to me, 'What capital have you got?' - 'None.' 'What do you propose to do?'- 'I propose to bring you the good will and the deposits of the Secretary,' I think the Senator would take me into partnership, and he would make more money by doing it than he ever made in his life, and we would contribute largely to any campaign fund desired by the Secretary."
At the time when this bank was made, the custodian of these fabulous sums of public money, John Thompson, a large stockholder, was its vice-president. He was informed that this bank with a capital of only $500,000 had subscribed as a purchaser of four per cent bonds to an amount exceeding thirty millions of dollars. When acquainted with this fact, Mr. Thompson protested against the assumption of such a risk, and said: -
"If these bonds were to fall in value one per cent it would wipe out three fifths of our capital. If they
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should fall two per cent, it would absorb more than the entire capital of the bank."
Mr. Thompson was assured by its president that there was no danger incurred, because of an agreement with the Secretary of the Treasury that the bank, in that case, would not be compelled to pay for the bonds. Mr. Thompson was astounded at this information, and he sold his stock in the bank, withdrew from its directory and organized the Chase National.
During the administration of Secretary Manning, the Treasury Department deposited sixty-three million dollars with the various national banks of New York City. At that time Mr. Sherman was in the Senate and denounced the act of Mr. Manning in the strongest language. Yet, Secretary Sherman had, while he was at the head of the Treasury, deposited more than four times that sum in a single bank.
During the entire public career of Mr. Sherman as Representative in Congress, as United States Senator, and as Secretary of the Treasury, he was not engaged in any other business With the exception of the four years that ho was Secretary of the Treasury, during which he received eight thousand dollars per annum, his official yearly income never exceeded five thousand dollars.
In a letter to one of his political friends in the State of Ohio, Mr. Sherman details the immense sacrifices he had made for the public during the forty years that he was its servant. He stated that his living expenses annually averaged ten thousand dollars during that time, and that his officia1 income never equaled his expenditures.
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At the time of the writing of that letter, his residence in Washington was a palace whose sumptuousness rivaled that of the crowned heads of Europe. In addition, he was one of the most extensive owners of real estate at the capital. He is a very large holder of stocks in national banks and railroad corporations. The miraculous process by which a high official of the Government can expend twice the amount of his salary for ordinary expenses during the early part of his political career - at which time he was a poor man - and yet accumulate a magnificent fortune out of the surplus, has long been a mystery, for the solution of which Mr. Sherman has volunteered no explanation. His accumulation of millions evinces a degree of thrift that is wonderful; and the facts in the career of Senator Sherman surpass the fabulous story of King Midas, whose touch turned everything to gold.
Yet this man is revered by the national banking money power and its satellites as the ablest American financier of the age.
Since 1861, he has been on every side of nearly every political and financial question that has agitated the country.
To illustrate the facility with which he can change his position on public questions, we refer to his late action on the policy of the United States toward the recognition of Cuban Independence. In the month of January, 1897, he introduced a fiery resolution in the Senate demanding the speedy recognition of Cuban belligerency. He out-jingoed the Jingoes. Three days afterward, he withdrew said resolution, with the lame explanation that its adoption would be inexpedient at that time.
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The profits of the national banking system up to and including the year 1880 were immense.
In a report of the Comptroller of the Currency for 1881, this official states that the net earnings of the national banks for the preceding twenty years were $512,825,325, besides a surplus of $130,000,000-thew hole aggregating $642,825,325; and that this enormous profit was earned upon an average capital of $500,000,-000,- a net profit of over twelve per cent annually above all expenses, including the princely salaries paid to the executive officers of the respective banks.
It will be asked, why should these financial institutions so often seek to bring on stringencies in the money market? The reason is clear to those who understand what class of men are at the head of the powerful national banks of New York City and other speculative centers. An examination of the directories of these great banks exhibits the startling fact, that the executive officers, directors, and heavy stockholders of these institutions are the largest operators on the Stock Exchange.
Having control of almost unlimited amounts of money, they are enabled to depress the value of stocks, bonds, and other securities when they are buyers on the market; and can enhance the value of stocks held by them when desirous of selling. Thus they are empowered to correct the fortunes of the smaller operators.
The entire property of the nation, both real and personal, is at the absolute mercy of these national bank money kings. The men, or combination of men, who control the volume of money of a nation are its masters, whether it is an absolute, or a constitutional monarchy, or a republic.
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It is a recognized principle of finance, that the volume of money afloat in a country fixes the general level of prices of commodities; it is true that there are some exceptions to this general rule, but they arise from unusual and unforeseen circumstances.
The power of the national banks to suddenly contract the circulating medium of the country, and the tyrannical manner in which they have exercised that privilege in the past, has awakened the gravest apprehension of the thinking men of the nation.
In his report of 1880, Treasurer Gilfillan stated that the national banks since the 20th of June, 1874, up to the time of his rcport of 1880, had surrendered their circulation in a sum exceeding $85,000,000, by depositing legal tender notes for the redemption of their circulating notes.
In addition to this contraction spoken of by the Treasurer in this report, the national banks possessed additional means of creating a sudden scarcity of money. Besides the circulating notes which these banks were authorized to loan as money, they controlled deposits of more than a billion dollars.
Therefore the loanable funds of these banks could be transformed into a most deadly weapon against the legitimate enterprise of the nation.
All that w as necessary to bring on a monetary panic was a concerted plan on the part of these banks to call in their loans, and this action would be followed by a crisis as surely as night followers the day.
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CHAPTER VII.
NATIONAL BANKS SECURE A CONTINUATION OF THEIR EXISTENCE.
"The abandonment of silver will result in the enhancement of the burden of all debts and fixed charges, acting as a drag upon production, and suffocation, strangulation, are words hardly too strong to express the agony of the industrial body when embraced in the fatal coils of a contracting money." - Francis A. Walker.
"Many of our rich men have not been content with equal protection and equal benefits, but have besought as to make them richer by act of Congress. By attempting to gratify their desires we have, in the results of our legislation, arrayed section against section, interest against interest, and man against man in a fearful commotion which threatens to shake the very foundation of our union.
"It is time to pause in our career; to review our principles, and, if possible, to revive that devoted patriotism and spirit of compromise that distinguished the sages of the Revolution and the fathers of our union. If we cannot at once, in justice to interests invested under improvident legislation, make our Government what it ought to be, we can at least take a stand against all new grants of monopolies and exclusive privileges; against any prostitution of our Government to the advancement of a few at the expense of the many, and in favor of compromise and gradual reform in our code of laws and system of political economy." - Andrew Jackson.
In the presidential campaign of 1880, the two great political parties arrayed themselves against each other in this contest with the utmost zeal.
The National Republican Convention met in Chicago
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The battle cry of the Republican party in this notable contest was "A solid South against a solid North."
The money power joined in the senseless hue and cry, and by playing upon the smouldering prejudices of the people growing out of the late war, and by seeking to reopen the festering wounds of sectional hate, aimed to control the election and consequently the financial policy of the Government.
Owing to the dissensions of the New York State democracy, which grew out of the gubernatorial election of 1879, and which were not healed, and the lavish use of money, the Republican candidates were successful.
After the 4th of March, 1881 the Republicans had full control of the Government, and there was no obstacle in their way to hinder or obstruct the execution of their policy.
William Windom, of Minnesota, was selected by President Garfield for the post of Secretary of the Treasury.
After the adjournment of Congress in the early part of 1881, Secretary Windom and the bond-holders mutually agreed that the bonds bearing five and six per cent interest then maturing, should be refunded at three and one-half per cent, payable at the option of the Government.
This action of Secretary Windom had no authority in any law then existing, and was an unwarranted assumption of the constitutional power of Congress by an executive officer.
The usurpation of legislative power by the Secretary of the Treasury was tolerated for the reason that it saved the Government a large amount of interest;
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nevertheless, Congress, at its next session, sharply criticized Mr. Windom for this exercise of arbitrary power.
The action of the bond-holders in voluntarily accepting a lower rate of interest than their contracts called for excited a great deal of comment at the time.
The supporters of the national banking money power never wearied of pointing at this sacrifice by the national creditors as a remarkable example of patriotism, and asserted that the bond-holders and national banks were not as dangerous to the liberties of the people as their opponents declared them to be.
This apparent sacrifice of millions of interest annually was a rare stroke of policy on the money power. The shrewd men at the head of the national banking system were thoroughly acquainted with those traits of character which distinguished who American people from all others of modern times.
They knew that we, as a people, loot to the events of today and do not worry with apprehensions for the future. Moreover, the country had entered upon a career of prosperity, the tendency of which was to make the people forgetful of the wrongs heaped upon them in the past by the present banking system.
According to the provisions of the national banking law of 1863,the charters of the national banks would expire in 1884, and the time seemed propitious for this money poorer to carry into execution the next step of its policy - which was to obtain the passage of a law through Congress extending the franchises of the national banks.
Therefore, during the time that the fears of the people were temporarily allayed by the voluntary
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acts of the bond-holders and banking interests in accepting a lower rate of interest on their bonds, the national banking money power seized this golden opportunity to secure an extension of their system.
Hence, at the next session of Congress, in 1882, Mr. Crapo, of Massachusetts, introduced a joint resolution authorizing national banking associations to extend their corporate existence for the period of twenty years. The speeches made against its passage were very able, notably those of Representatives Carlisle and Culberson.
So powerful was the opposition against an extension of the national banking system that the Democratic minority succeeded in engrafting a section upon the resolution, by which the circulating notes of national banks could not be surrendered to an amount exceeding $3,000,000 per month.
This curtailed the power of the banks to suddenly contract the volume of currency, by surrendering up for cancellation large amounts of their circulating notes, a practice to which they had resorted many times in the past twenty years.
During the debate upon this resolution it was shown by the opponents of the national banking system that the New York Clearing House Association had conspired against the constitutional power of Congress, by refusing to accept silver dollars and silver certificates; that this association of national banks held themselves superior to the law, and arrayed themselves in solid phalanx against the financial interests of the people.
It was further shown that the poorer of the national banks was so great that they had the means to unsettle business throughout the country, and that every panic,
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from which the country suffered since the close of the war, was originated by these banks.
By an additional amendment to the resolution it was made compulsory on the part of the clearing house associations to accept silver certificates in settlement of balances.
Again, the privilege of the national banks to institute suits at law in the Federal courts, as courts of original jurisdiction, was taken array, and this means of dragging litigants hundreds of miles from their homes at immense sacrifice of time and money, was denied to these corporations, which heretofore was one of their most tyrannical means of harassing individuals.
Therefore it will be seen that the sturdy opposition of the Democratic minority in the House had succeeded in extracting a few of the sharpest fangs of the greedy national banking money poorer.
As amended, the resolution passed the House and was transmitted to the Senate.
Daring the Senate debate on the joint resolution to renew the charters of the national banks, Senator Voorhees eloquently and truthfully depicted the vast bounties that had been bestowed upon these creatures of the Government.
Ho pointed out the overshadowing influence of the national banking power.
On June 19th, 1882, he said: -
"A brief glance at the conduct of the banks during the last year and a half is all that I can indulge in at this time, but it is sufficient to prove the truth of what I say.
"In the closing days of the last Congress and of the last Administration the banks precipitated an issue upon the people which ought not to be forgotten on an
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occasion like this; an issue so full of danger to constitutional liberty that it ought to be faithfully remembered now that they are asking a new and indefinite lease of power.
"It is now twenty years ago that this Government first engaged in building up, fostering, and encouraging the present vast and overshadowing system of national banking.
"No favor ever demanded by the banks has ever been withheld, no privilege denied, until now they constitute the most powerful moneyed corporations on the face of the globe. Congress has heretofore on nearly all occasions abdicated its powers under the Constitution over the finances of the banks, except when called upon to legislate in their favor. They have demand the violation of legislative contracts with the people, and the demand has been granted, whereby their own gains and the people's burdens have been increased a thousand fold beyond right and justice. They have demanded the remission of all taxation on their bonds, and it has been conceded, thus leaving the poor to pay the taxes of the rich. They have been fortified in their strongholds of moneyed caste and privilege by double lines of unjust laws, supplemented with here a redoubt and there a ditch, to guard them from the correcting hand of popular indignation, until now, deeming themselves impregnable, they bully and defy the Government."
He continued as follows: -
"Sir, with full and unrestricted power over the volume of the currency and, consequently, over all values conceded to the banks, together with ample machinery by which in an emergency they can defy the passage of any act of Con what is left to the Government except an abject so on? This Government could not, to-morrow, go to war in defense of its flag, its honor, or its existence without first asking permission to do so of the great financial corporations of the country. If there was an invading on our soil
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this hour, Congress could not with safety or show of success declare war to repel it without first supplicating cowardly and unpatriotic capital, engaged in banking, not to contract the currency, withhold financial aid, and leave the country to starve. In fact, there is no measure of this Government, either in peace or in mar, which is not wholly depending on the pleasure of the banks.
"This Government is at the mercy of its own creatures. It has begotten and pampered a system which is now its master. The people have been betrayed into the clutches of a financial despotism which scorns responsibility and defies lawful restraint."
At the present time the government is a submissive instrument in the hands of this money power.
After a full discussion in the Senate, during which many amendments were added to the resolution, it was returned to the House. The House agreed to the amended bill with the exceptions of a few of the Senate amendments, in which it refused to concur.
The bill then went back to the Senate, which refused to recede from its amendments.
Upon this disagreement, both Houses appointed Committees of Conference, who were to reconcile the differences existing between the two Houses with reference to the resolution as amended.
After these committees had held several meetings an agreement was reached, the resolution was reported back to the Senate and House and the measure was adopted.
This act was approved by the President on the 12th of July, 1882.
Hence, this gigantic moneyed monopoly received a new lease of life for the period of twenty years longer.
>From this time on, it was the constant purpose of the
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national banks to build up a colossal system of bank credit that would make the entire business interests of the country tributary to its power.
In the congressional election of 1882 the Republicans were overwhelmingly defeated, and the House became Democratic by a large majority.
On February 12, 1884 Senator McPherson, of New Jersey, a millionaire and national banker, introduced a bill to it national banks to increase their circulating notes op to the par value of the bonds deposited by them to secure their circulation.
The Senate the bill, but it was defeated in the House.
In this same month the sub-treasury at New York City, through the Assistant Treasurer, addressed an inquiry to the President of the New York Clearing House as to the effect of the government paying its balances in silver money.
This action of the Sub-Treasurer was clearly for the purple of rendering the agitation against silver, and it had the further intention of giving an excuse to the national bankers to precipitate a panic, and thus lay the foundation for a new demand for more legislation in favor of the banks.
This cowardly act of the sub-treasurer was an implied admission that the Clearing House Association was mote powerful than Congress, and that it was above all law.
On February 18, 1884,a bill for the retirement and re-coinage of the trade dollar was taken up by the House.
At this time the number of trade dollars afloat in the country approximated $36,000,000,and they had no
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legal tender debt-paying power whatever. They were mere bullion.
On April 1, 1884, the Committee on Banking and Currency, to whom the bill had been referred, reported it back to the House.
This bill authorized the government to receive these trade dollars for all dues to the United States; they were to be received in exchange for standard silver dollars coined under the Bland-Allison law; after such exchange the trade dollars were to be coined into standard dollars.
Section 4 of the act provided that the trade dollars so exchanged should be coined under the act of February 28, 1878.
On motion of Mr. Bland, section 4 was stridden out, and the bill as thus amended, should it become a law, would add nearly forty million legal tender silver dollars to the volume of money.
In its amended form it passed the House by a vote of 198 yeas to 45 nays, and it was transmitted to the Senate.
In the meantime, after its passage by the House, the New York national banks had taken their cue from the letter addressed to them by the Sub-Treasurer, and at once began a vigorous contraction of the currency by refusing to loan money to the West and South, and calling in outstanding loans.
This action of the New York banks, with the tacit permission of the Treasury Department, brought on the great panic of 1884, in which year alone there were 10,968 business failures, with liabilities aggregating $226,343,427.
At the same time money commanded three per cent
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interest and commission per day on call. This was usury at the annual rate of eleven hundred per centum!
It is asserted that while the banks refused to loan money, and mere surrendering their circulating notes by depositing United States legal tenders with the Comptroller of the Currency, that the chief stock-holders in these banks were using the deposits of these institutions in making loans at those exhorbitant rates of usury.
It may be inquired by some, why did not the Comptroller of the Currency exerise his lawful powers, and proceed against these banks for these notorious violations of law?
The facts were that every Comptroller of the Currency, since the creation of that office, has been a willing instrument in the hands of the national banks, and the Comptrollers, time and again, authorized these banks to violate the national banking law whenever it was to the financial interests of these corporations.
The open and notorious infractions of law practiced by these banks found ready apologists in Congress, who audaciously asserted that the banks mere the best judges of the policy to be carried out by them, anti that to enforce the law would close these institutions, and deprive the people of the benefits flowing from this beneficient system.
The history of the past thirty years exhibits this remarkable fact, that each and every Comptroller of the Currency, for his slavish subserviency to the national banks, has been rewarded by an election to the presidency of some one of these great financial institutions.
Upon the appearance, in the Senate, of the House
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bill, providing for the recoinage of the trade dollars, it was referred to the Finance Committee, who reported a substitute of five sections.
Section z authorized the exchange of trade dollars for standard dollars, the time of exchange to be limited to July 1, 1885.
Section 2 provided that these trade dollars were to be coined as part of the bullion under the Bland-Allison law.
Section 4 provided for a renewal of that farce, an International Monetary Commission.
Section 5 provided that if no treaties could be ratified with foreign nations for free coinage of silver before August 1, 1886, then a suspension of the further coinage of silver dollars by the United States should take place by a repeal of the Bland-Allison law.
No action was seen upon this bill by the Senate, and the efforts of the House to legitimize the trade dollar by making it legal tender, and to increase the volume of silver coin were again thwarted.
In his annual message to Congress, in December, 1884, President Arthur recommended the cessation of the coinage of the silver dollar, and gave as his reasons for such recommendation that nearly 185,000,-000 had been coined, of which only a little over 40,000,000 were in circulation.
We quote his language in full. He says: -
"It appears that annually for the past six years there have been coined in compliance with the requirements of the act of February 28, 1878, more than $27,000,000. The number now outstanding is reported to be nearly $185,000,000, whereof but little more than $40,000,000, or less than twenty-two per cent, are in actual circulation. The mere existence of this fact seems to me to
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furnish of itself a cogent argument for the of the statute which has made such a fact possible."
President Arthur sought to convey the impression to Congress that only 40,000,000 silver dollars were in circulation.
At the time he penned this message the records in the Treasury Department shamed that 133,940,121 silver dollars were in active circulation through their paper representative, the silver certificate, and that there were actually but 12,000,000 silver dollars lying idle in the Treasury.
One striking fact which attracts attention is the fo1-lowing: That the leading opponents to the coinage of silver dollars have never yet agreed upon the facts, and the arguments which they advance against the use of silver as money.
In his message of December 1, 1884,President Arthur urged as a weighty reason for the discontinuance of the coinage of silver dollars, that less than twenty-two per cent. of them mere in actual circulation.
In hie report of 1880, in which he advised the cessation of the coinage of the silver dollars, Secretary Sherman gave his reason why silver should not be coined, in which he says that it was not held, or hoarded, or exported, but it was pushed into active circulation.
In this same message President Arthur made the following reference to the trade dollar: -
"While the trade dollars have ceased, for the present at least, to be an element of active disturbance in our currency system, some provision should be made for their surrender to the Government. In view of the circumstances under which they were coined and of the fact that they never had a legal tender quality,
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there should be offered for them only a slight advance over their bullion value."
This statement of the President with reference to the legal tender power of the trade dollar is evidence of those inaccuracies that occur many times in the state papers of high officials. The President averred that trade dollars mere never legal tender, while the fact is that by the law of February 12, 1873 they were made legal tender for any one payment not exceeding five dollars.
The 1am which conferred upon them this legal power continued in force until July 22, 1876, when the legal tender quality was taken away.
A further inaccurate statement of the President appears, when he speaks of the amount of standard dollars in circulation, which he places at a little over 40,000,000. While the actual facts were that the volume of silver dollars in circulation was 174,000,000.
Secretary Sherman had urged as an insuperable objection against the further coinage of silver dollars that they were not held, or hoarded, but were kept in active circulation. President Arthur asked the suspension of the Bland-Allison law of 1878 on the ground that they did not circulate actively enough.
This is not the first time that these two distinguished gentlemen disagreed during their public careers, for while Sherman was Secretary of the Treasury, and President Arthur was collector of the Port of New York, they had a notable controversy, with which the public were doubtless familiar.
While President Arthur was requesting Congress to suspend the coinage of the silver dollar, the banks of New York City combined to make a raid on the Treas-
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ury by presenting greenbacks for gold. That this was done with the connivance of Secretary of the Treasury, McCulloch, is evident from the acts of that official. He had dispatched a telegram to the Sub-Treasurer, in New York City, stating that the country would be on a silver basis in thirty days.
It was nothing less than a plot formed by the bankers and the Secretary to frighten Congress into repealing the Bland-Allison law of 1878.
In the meantime, the presidential campaign of 1884 had resulted in the election of Grover Cleveland, of New York, over the Republican candidate, James G. Blaine.
Prior to his election to the Presidency, Mr. Cleveland had held the office of Mayor of Buffalo, and was Governor of the State of New York, in which positions he had won much distinction as an honest and capable executive.
Some time previous to his inauguration, the report became current that the President-elect was opposed to the further coinage of silver.
In order to ascertain the views of Mr. Cleveland upon this phase of the financial issue, Congressman A. J. Warner and ninety-four members of the House, on the llth day of February, 1885, joined in a letter to the in-coming President, requesting that he outline his future policy on the silver question, then agitating the country.
On February 24th, eight days before Mr. Cleveland was inaugurated, he gave out an open letter to the press in reply to that of Hon. A. J. Warner.
In the course of that remarkable document occurs the following statement: -
"I hope that you concur with me, and with a great
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majority of our fellow citizens, in deeming it most desirable at the present juncture to maintain and continue in use the mass of our gold coin as well as the mass of silver already coined. This is possible by a present suspension of the purchase and coinage of silver. I am not aware that by any other method is it possible. It is of momentous importance to prevent the two metals from parting company; to prevent the increasing displacement of gold by the increasing coinage of silver; to prevent the disuse of gold in the custom houses of the United States in the daily business of the people; to prevent the ultimate expulsion of gold by silver."
To state that the expectations of the Democratic party were rudely shattered by the position assumed by Mr. Cleveland, in his reply to the letter of Mr. Warner, would be putting it very mildly.
The mass of the party expressed great astonishment, not to say indignation, at the bold stand taken by the President-elect, in which he aligned himself with the single gold standard.
In his zeal for the suspension of the coinage of the silver dollar, Mr. Cleveland was led into erroneous statements of facts as to the alleged disuse of gold in the custom houses and in the business of the people.
It is a matter of public record that, in 1880, the imports of gold exceeded the exports thereof by $77,ll9,371; in 1881, the excess of imports of gold over exports were $1,789,174; in 1883, $6,133,261; in 1884 the exports of gold over imports were $18,250,640, 1eaving a great balance of imported gold over exports during those five years of more than $150,000,000.
This great gain of gold took place during the time the Bland-Allison law was in operation.
Upon the appearance of this reply of Mr. Cleveland
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to the communication of Hon. A. J. Warner and others, the Wall street clique and their allies seized their opportunity.
They swooped down on Congress and endeavored to force a repeal of the silver law.
The members of the House were besieged by these hordes of coin venders and bullion brokers; the national banking money power threatened to visit another panic upon the people, and predictions mere 'freely made that gold would go to a premium if the silver lair was not repealed.
The Democratic members of Congress were informed by the thousand per cent men of New York City that it was the wish of President-elect Cleveland that the law authorizing the coinage of silver dollars be repealed.
The New York Herald, one of the greatest journals of the East, constantly kept in a prominent place in its columns, the legend, "We are still coining the go and 75 per cent dollars."
Every means and all possible influences were brought to bear upon Congress to force it to repeal the Bland-Allison law, but without avail.
A single attempt was made to carry into effect the wish of the President-elect, but it failed so ignominiously by such a decisive vote that no further effort was made in that Congress. It was as follows: On February 26, 1885, House bill 8256, being the sundry civil appropriation bill, was pending before the House. A clause was tacked to this bill, providing for the suspension of the operations of the law of February 28, 1878,- the Bland-Allison law.
Mr. Randall, an Eastern Democratic member of the
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House, moved to suspend the rules and consider said clause.
This motion was disagreed to by a vote of ll8 yeas to 152 nays, and this clause was abandoned and stricken from the bill.
The letter of Mr. Cleveland was regarded by the House as an open and manifest attempt to influence Congas against the continued coinage of silver, and, if such was the intention of the President-elect, he promptly received a well-deserved rebuke for his attempted interference with the legislation of Congress.
One feature of the conduct of Mr. Randall, in his effort to engraft upon an appropriation bill a clause to repeal the Bland-Allison lair, exhibits the avidity of the money power to seize every opportunity, however slight, to gain its ends by legislative sanction, and that is - immediately upon the appearance of the Warner letter, it presumed that the mere ipse dixit of Grover Cleveland would coerce Congress into submission to his views.
The infamous nature of the financial legislation from 1862 to 1875, in so enormously enhancing the value of the public debt, and in enriching the bond-holders at the expense of the productive energy of the country, will be shown by the following figures, taken from a work entitled, "The Philosophy of Price," quoted in the Daily News Almanac and Political Register for 1891.
The time covered by "Philosophy of Price" is July 1, 1866, up to and including 1885. "Philosophy of Price" says: -
"Here is a table showing the debt of the United
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States on the 1st of July, 1866 and 1885, including non-interest bearing greenbacks, expressed in dollars, and also in the things working folks have to produce in order to get the dollars with which to pay debts and interest: -
National Debt 1866. National Debt 1885.
Debt in dollars......$2,773,000,000 $800,000,000
Beef, barrels......... 129,000,000 135,000,000
Corn, bushels....... 2,000,000,000 3,000,000,000
Wheat, bushels.... 800,000,000 1,740,000,000
Oats, bushels....... 3,262,000,000 4,357,000,000
Pork, barrels........ 82,000,000 96,000,000
Coal, tons............ 213,000,000 400,000,000
Cotton, bales....... 12,000,000 34,000,000
Bar iron, tons...... 24,000,000 40,000,000
"Almost every product of labor shows the same result. We paid from 1866 to 1884 the public debt: Interest, $1,870,000,000 and principal about $1,200,000,000; yet we fin that what there is left of it when measured labor, or the product of labor, is fifty per cent greater than the original debt."
This colossal robbery of the nation, and consequently of the people, was planned and matured by the national banking money power. It is true that the idea of this system of banking had its origin in England, and it is also a fact that the scheme of legislating increased value into the bonded debt was suggested by the influential bankers of London.
Each one of the series of enactments which legally confiscated billions of property of the tax-payers, and which handed it over to a few individuals, was placed upon the statute-boots under the false and misleading plea of maintaining the "Credit of the nation untarnished."
That distinguished historian, Prof. J. C. Ridpath, eloquently described the legislative process by which
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the value of the public debt was vastly increased. He said: -
"It is the hardship of war that brings debt upon the country which engages in it. In our own case we piled up a debt mountainwise. The prodigious pile reached the clouds. In any old nation there would have remained no hope at all of paying it. It would simply have been laid upon posterity as an everlasting tax. The principal question, however, with Congress and with the people of the United States, was how they should measure and manage this debt. Gold and
silver had disappeared. Paper money prevailed and abounded. The premium on coin arose to almost two hundred per cent. The dollar of the law and the contract became a paper dollar, which, as measured by the standard of gold, was, for a considerable period, worth less than fifty cents.
"But what was the equity of this situation? One class of statesmen, backed up and instigated by the creditor classes, held that the dollar was always the gold and silver dollar. Practically this was not so. Theoretically and even constitutionally it was probably so. For many years together the dollar of the law and the contract was, to all intents and purposes, a dollar of paper. During the same period the modicum of gold and silver remaining in the country - though it was stamped and branded with the names of coins -was really merchandise. At length the bottom was reached - or the top, as the case may be - and the readjustment became necessary.
"Then came on the warfare between the advocates of the so-called 'honest dollar' and the paper dollar with which, and on the basis of which, the business of the country had been so long transacted. The advocates of high payment took the 'honest dollar' as their catch-word, and, to make a long narrative brief, they won with it, and by a series of legislative enactments, entailing the greatest hardships on the producing interests of the country, succeeded in twisting up,
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turn by turn, the standard unit in the financial mill, until the so-called resumption of specie payment was anally, after fourteen years from Appomattox, effected.
"Thus the value of the national debt was augmented from year to year as rapidly as it was paid away.. As fast as payment was made the value of the dollar in which it was expressed was increased. To the debtor class all this was the labor of Sysiphus. The toiler laboriously rolled the stone to the top of the hill; but ever, when near the crest, it got away with him and returned with thundering and the roar of bankruptcy to the bottom. To the present day the process has been kept up, and, notwithstanding the multiplied billions upon billions which the American people have paid in principal and interest upon that patriotic we debt, which expressed their devotion and sacrifice, it is the truth of history, that the debt itself, is at the present time, worth virtually as much to the holders as it was when it reached its nominal maximum - in August, 1865."
In his effort to convey an adequate idea of the nature of that legislation, which had plundered the American people of billions of dollars, this renowned scholar and writer had recourse to the sublime imagery of Homer.
Prof. Ridpath demonstrates that the public debt was not decreased at all, although billions had been applied to its payment.
Not only is this true of the public debt, but the same process of depreciating the value of property has likewise enhanced the value of private debts.
The amount of property that has been transferred from debtors to creditors, as a necessary result of the enormous appreciation of money brought about by contraction of its volume, is beyond computation.
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In a great speech, Wendell Phillips, illustrates the means by which the money power absorbed the wealth of the country, by juggling with the currency. He said: -
"In other words, it was the currency, which, rightly arranged, opened a nation's well springs, found work for willing hands to do, and filled them with a just return, while honest capital, daily larger and more secure, ministered to a glad prosperity. Or it was currency, wickedly and selfishly juggled, that made merchants bankrupt and starved labor into discontent and slavery, while capital added house to house and field to field, and gathered into its miserly hands all the wealth left in a reined land.
"The first question, therefore, in an industrial nation is, %here ought control of the currency to rest? In whose hands can this almost omnipotent power be trusted? Every writer of political economy, from Aristotle to Adam Smith, allows that a change in the currency alters the price of every ounce and yard of merchandise and every foot of land. Whom can we trust with this despotism? At present the banks and the money kings wield this power. They own the yard-stick, and can make it longer or shorter, as they please.. They own every pound weight, and can mate it heavier or lighter as they choose. This explains the riddle, so mysterious to common people, that those who trade in money always grow rich, even while those who trade in other things go into bankruptcy."
On the 3d of February, 1886, Hon. R. Q. Mills, of Texas, in the heat of righteous indignation eloquently arraigned that unlimited avarice that was continually besieging Congress to enhance the value of bonds and securities at the expense of the producers. He said: -
"But in all the wild, reckless, and remorseless brutalities that have marked the footprints of resistless power there is some extenuating circumstance that
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mitigates the severity of the punishment due the crime. Some have been the product of the fierce
passions of war, some have some from the antipathy that separate alien races, some from the superstitions of opposing religions.
"But the crime that is now sought to be perpetrated on more than fifty millions of people comes neither from the camp of a conqueror, the hand of a foreigner, nor the altar of an idolator. But it comes from those in whose veins runs the blood of the common ancestry, who were born under the same skies, speak the same language, reared in the same institutions, and nurtured in the principles of the same religions faith. It comes from the cold, phlegmatic marble heart of avarice,-
avarice that seeks to paralyze labor the burden of debt, and fill the land with destitution and suffering to gratify the lust for gold,- avarice surrounded by every comfort that wealth can command, and rich enough to satisfy every want save that which refuses to be satisfied without the suffocation and strangulation of all the labor of the land. With a forehead that refuses to be ashamed, it demands of Congress an act that will paralyze all the forces of action, shut out labor from all employment, increase the burden of debts and taxation, and send desolation and suffering to all the homes of the poor."
In his first annual message to Congress, December 8, 1885, the President took a decided stand against the continued coinage of silver. In this document he says:
"The necessity of an addition of the silver currency of the nation as is compelled by the silver coinage act is negatived by the fact that up to the present time only about fifty millions of the silver dollars so coined have found their may into circulation, leaving more than one hundred and sixty-five millions in the possession of the Government, the custody of which has entailed considerable expense for the construction of
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new vaults for its deposits. Against this latter amount there are outstanding silver certificates amounting to about ninety-three millions of dollars."
Further on in this same message he said: -
"At times during the past six months fifty-eight per cent. of the receipts for duties have been in silver or silver certificates, while the average within that period has been twenty per cent."
A comparison of the statements in his message with the predictions ventured in the Warner letter will be instructive. In the latter he desired "To prevent the disuse of gold in the custom houses of the United States;" in his message of December 8, 1885, he shows that instead of silver displacing gold in the payment of duties, only about twenty per cent of the latter were paid in silver or silver certificates.
Just why the payment of twenty per cent of the duties in silver should arouse the apprehensions of the President is not very apparent.
Furthermore, the very purpose of coining these silver dollars was to enable people to transact business, to pay their debts to each other, and to the Government.
Mr. Cleveland further says: -
"The condition in which our Treasury may be placed by a persistence in our present course, is a matter of concern to every patriotic citizen who does not desire his Government to pay in silver such of its obligations as should be paid in gold."
Again he says: -
"We have now on hand all the silver dollars necessary to supply the present needs of the people and to satisfy those who from sentiment wish to see them in circulation, and if their coinage is suspended, they can readily be obtained by all who desire them. If the
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need of more is at any time apparent their coinage can be renewed."
The President then recommends the suspension of the coinage of silver dollars coined under the law of 1878.
According to the President's theory and reasoning, the most effective means of supplying the volume of money needed by the people would be a suspension of its coinage.
In this message President Cleveland came out squarely in favor of perpetuating the national banking system. In this course he allied himself with the money power, and earned the unenviable distinction of being the first Democratic President that advocated the policy of delegating the power of issuing money to private corporations.
In this course he was sustained by a few Eastern Democratic members of Congress, but he could not lead the great body of the Western and Southern Democracy to accept that Tory-Republican system of finance that had been imported from London in 1863.
During the following year, the use of silver and silver certificates increased from $143,000,000 to $167,000,000, which indicated the great popularity of this form of money with the people.
Notwithstanding these facts, the President in his next annual message, December 6, 1886, said:
"I see no reason to change the views expressed in my last annual message on the subject of compulsory coinage. "
On December 17, 1886, Senate bill No. 199, providing for the redemption of the trade dollars for standard silver dollars, the trade dollars so redeemed to be sent
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to the mints for coinage as part of the bullion to bc purchased under the Bland-Allison law of February 28, 1878, passed the Senate.
On February 12, 1887, Senate bill 199 was pending before the House, and it was amended to authorize the receipt of trade dollars for government dues, and in exchange for standard dollars, and for coining the said trade dollars into standard dollars, not as part of the bullion and coinage under the Bland-Allison law.
The bill, as amended, passed by a vote of 174 yeas to 36 nays; both Houses appointed a Committee of Conference, which reported a substitute that axed the period of six months from date of the act for the exchange of trade dollars for standard dollars, or for fractional silver coin. The trade dollars so exchanged were to be recoined and not counted as part of the silver to be purchased under the Bland-Allison law of 1878.
This act became a law without the approval of the President.
Be it said to the eternal honor of the House of Representatives, which was Democratic, the advice and recommendations of the President fell on deaf ears, and this co-ordinate branch of the Government would not be coerced into repealing the Bland-Allison silver law.
In spite of the fears of President Cleveland that gold mould be displaced by the increased coinage of silver, the net gain of gold during his administration was increased many millions.
In the meanwhile the monetary stringency of 1884 continued in all its severity, and even the banks of New York City felt the effects of the panic, which was the direct result of their concerted action.
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These great financial institutions of New York City called upon the Government for assistance; whereupon Secretary of the Treasurer Manning, a national banker, came to their relief by depositing with these banks government money to the amount of $63,000,000 without interest for the use of that enormous sum, which had been wrung from the people by a burdensome system of taxation.
Had the farmers of Kansas, or Nebraska, requested the Federal Government to loan them the public funds to assist them in agricultural pursuits, the millionaire beggars and paupers of Wall street would have emitted a loud and prolonged howl that would have been heard to the nethermost parts of the earth.
The people of Kansas and Nebraska would have been assailed by every epithet that could have been coined from the English language.
The national bank monopoly, the gold gamblers, stock speculators, railroad wreckers, the Shylocks, who gladly exacted a thousand per cent usury, with the subsidized press and its satellites, would have denounced the hard working farmer of Kansas or Nebraska as a "long whiskered hay-seed," a "socialist," a "dangerous anarchist," or a "crank."
The Nasts and the Gillams, famed in caricature, would have expended all their genius in holding him up to ridicule.
While it would be dangerous socialism for the Government to assist the farmer during his calamities, it me the highest essence of patriotism to save the panic-breeders of New York City from the consequences of their own traitorous conduct by donating them the use of $63,000,000 in government funds.
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In the meantime, notwithstanding the aid received from the Federal Government, the banks of New York City organized a clique with the intention of making a raid upon the gold in the Treasury.
The base ingratitude of the New York banks aroused the ire of Secretary Manning, and he called upon those banks who had organized a corner against the Treasury gold, and informed them of what would follow if they persevered in that course. He said:
"You may precipitate a panic. The Government is strong; the Government can stand a panic, but you will have the panic if you continue to embarrass the Government as you have done."
He continued: -
"Here are twenty million dollars in round silver dollars, not certificates. Give me your gold for it and stop this raid upon the Treasury, or else you shall have the panic."
The heroic treatment of Secretary Manning was a warning to these scoundrels, who would willingly sink the Government if money could be made by the operation.
The stern threats of the Secretary frustrated this attempt to loot the Treasury of its gold, and to coerce Congress into repealing the Bland-Allison silver law.
In his annual message of December, 1887, President Cleveland relegated the financial question to the rear, and pushed the tariff issue to the front.
This document is justly regarded as one of the strongest state papers that ever eminated from the pen of the President.
In this message the President urged the necessity of a complete reformation of the then existing tariff, and he took strong grounds in favor of suppressing the trusts.
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Upon the appearance of this message, the leaders of the Republican party charged the President with having committed the Democracy to the policy of British free trade.
Mr. Blaine, who was in Paris at the time when the contents of the message were made public, availed himself of the opportunity to answer the President by a counter blast, in the form of an extended interview held with a representative of the New York Tribune.
Meanwhile, since 1883, the national banks steadily continued their policy of contracting the currency, by substituting government legal tender notes for the United States bonds deposited with the Comptroller of the Currency to secure their circulating notes.
This policy, to a large extent, neutralized the benefits derived from the increased use of silver.
The object of the banks, in thus withdrawing their bonds deposited to secure their circulating notes, me for the avowed purpose of obtaining the great premium which they brought in the market - a premium which ranged as high as twenty-nine per cent on the dollar.
Beside the contraction brought about by the process of depositing legal tender notes to redeem the circulating notes of national banks, the latter form of currency was surrendered by the banks, and the bonds deposited to secure these bank notes were taken up by the depositors and sold for the premium. This worked a double contraction of the currency.
During this time the Government was redeeming its bonds, and this process of redemption was carried on by the payment of a large premium to the bond-holders and national bankers.
In his report for the year 1892, the Comptroller of
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the Currency showed the extent to which this system of contraction was carried on from 1883 to 1888 by these fiscal agencies of the Government.
>From October 31, 1883, to October 31, 1884, the national banks surrendered their circulating notes to the amount of $24,170,676; from October 31, 1884, to October 31, 1885, the banks surrendered $15,545,461; from October 31, 1885, to October 31, 1886, national bank notes were contracted $56,590,533; from October 31, 1886, to October 31, 1887, the banks surrendered up their notes to the amount of $50,495,589; from October 31, 1887, to October 31, 1888, a further decrease was made by cancelling national bank notes to the amount of $16,84,739.
It will be ascertained that the total voluntary contraction of national bank currency, from 1883 to 1888, reached the great sum of $163,000,000.
Although the Bland-Allison law was in operation, and the Government was throwing vast sums of money into circulation by the redemption of bonds, yet the volume of money in circulation was not increased.
For nearly every dollar emitted by the Treasury Department for the redemption of bonds, the national banks surrendered up almost an equal amount of their circulating notes.
On February 29, 1888, House bill No. 5034 was pending in the House of Representatives
This measure authorized the Secretary of the Treasury to apply the surplus in the Treasury to the purchase or redemption of United States bonds. The bill passed.
The object of this measure aimed at relieving the money market of its stringency by the purchase of
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bonds, and the consequent increase of the volume of currency.
On March 26, 1888, House bill 5034 came up in the Senate, and Senator Spooner offered a substitute, declaring section 2 of the sundry civil appropriation law of June 30, 1882, a permanent provision. The substitute was agreed to by the Senate.
Senator Beck offered an amendment, directing the Secretary of the Treasury, on the retirement of national bank circulation, and on failure of other banks to take out an equal amount, then to purchase an equivalent amount of silver bullion in excess of the minimum, required under the law of February 28, 1878, to be coined and used as provided in said act.
The amendment was agreed to by a vote of 32 yeas to 13 nays.
During the debate on the amendment offered by Senator Beck, Senator Plumb made the following remarks: -
"It is estimated that there are in circulation, including that which is locked up in the Treasury and held in the banks as a reserve fund, about $1,600,000,000, of all kinds of currency of the United States, gold and silver, the surplus of gold and silver certificates, greenback notes and national bank notes, all told, and there are more than $60,000,000,000 of property which mast finally be measured by this volume of currency. It has been contracted during the last year morc than live per cent in addition to all that has occurred by reason of abrasion and loss. No man can tell the volume of greenbacks outstanding. Nominally it is $346,000,000 and a fraction, but that volume has been subject to all the accidents which have occurred during the past twenty-five years, whereby money has been consumed, worn out, lost, and it is doubtful if the amount is really over $300,000,000 today.
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"But say nothing about that, the retirement of the national banking circulation during the twelve months has been five per cent. of the to amount of the currency outstanding. There has been during that period a phenomenal depreciation of the prices of property. There has been the greatest depreciation of the price of agricultural products the country has ever known."
In speaking of the effects of contraction of the currency in depreciating the value of property, he said: -
"The contraction of the currency by five per cent. of its volume means the depreciation of the property of the country $3,000,000,000. Debts have not only increased, but the means to pay them have diminished in proportion as the currency has been contracted. Events based upon nonlegislation have proved of advantage to 1enders, but disastrous to borrowers."
The bill then went to the House, but as it was near the close of the session, it did not receive any consideration.
Meanwhile the panic of 1884, as it was called - but which really began in 1882- raged throughout the entire administration of President Cleveland.
The aggregate number of failures for the years 1885, 1886, 1887 and 1888 were 51,748, and the liabilities were $756,597,883.
It was during this period of business failures and general depression everywhere, with the consequent sacrifice of property at ruinous prices, that the holders of United States bonds were obtaining a premium for their bonds ranging as high as twenty-seven per cent.
In his annual message of December, 1888, President Cleveland again urged the repeal of the Bland-Allison law. He said: -
"The Secretary recommends the suspension of the
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further coinage of silver, and in such recommendation I earnestly concur."
Up to November 30, 1888, 312,570,990 silver dollars had been coined, of which 60,970,990 were in active use, not including silver certificates to the amount of $237,418,346- making a total of $298,389,336 in silver dollars and certificates that were in active circulation.
It will be observed that the many predictions of President Cleveland, as to the capacity of the country to use silver as money, were utterly discredited by these facts.
The determined opposition of the President to the coinage of silver was one of the strange features of an otherwise highly successful administration.
With the exception of his hostile attitude to silver as money, and his advocacy of the perpetuation of the national banking system, Mr. Cleveland gave the people an administration of public affairs that shed honor upon himself, and its efficiency was not surpassed by any in the annals of American history.
During the four years that he directed the public affairs of the nation, the public debt was reduced in the magnificent sum of $341,448,449.
It is true that this vast decrease of the public debt in the short period of four years resulted in an immense profit to the bond-holders and national bankers who surrendered their bonds for payment.
The amount of premium on the bonds so surrendered was $59,000,000, and this measured the profit obtained by the banks and bond-holders in the process of redeeming the debt.
In addition to this vast decrease of the public debt,
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a surplus of $83,269,220 was accumulated in the Treasury over and above the gold reserve of $100,000,000.
In addition to this vast sum of money, the result of a frugal and honest administration, a bank security fund of $82,597,250 in legal tenders was accumulated as a trust fund for the redemption of national bank notes.
The total amount of cash in the Treasury on the 4th of March, 1889, when his successor was inaugurated, was $265,846,441.
His administration of other departments of the Government was notably successful.
Tens of millions of acres of the public lands, fenced in by great corporations, were restored to the public domain; and the usurpers driven off by the vigorous policy of the President.
Land grants embracing many millions of acres were forfeited and throw open for settlement.
For the first time since 1861, the Indian Department was honestly manage, and the red man received just and humane treatment at the hands of the United States.
Nevertheless the ultimate baleful results of his influence in favor of the national banks, and a single standard of gold, eventually more than counteracted an honest, economical management of the public affairs of the country.
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CHAPTER VIII.
THE NATIONAL BANKING MONEY POWER SECURES COMPLETE CONTROL OF THE TREASURY.
"Resolved, That Congress has no power to charter a United States bank; that me believe each an institution to be one of deadly hostility to the best interests of the Government, dangerous to our republican institutions and the liberties of the people, and calculated to place the business of the country within the control of a concentrated money power and above the laws and the will of the people."- Democratic Platform, 1840.
"The right of issuing paper money as currency, like that of issuing gold and silver coins, belongs exclusively to the nation, and cannot be claimed by any individuals."- Albert Gallatin.
In the presidential campaign of 1888, General Benjamin Harrison was the successful candidate for the presidency.
The national Republican platform, on which Mr. Harrison stood, vigorously charged the administration of President Cleveland with having attempted to dcmonetize silver.
The active opposition of President Cleveland to the use of silver as money gave some color to this charge. On the 4th of March, 1889, General Harrison was duly inaugurated.
For Secretary of the Treasury he selected the Hon. William Windom, of Minnesota.
In addition to having the Presidency, the Republicans had control of both branches of Congress.
John Sherman occupied his old position of Chairman of the Finance Committee of the Senate.
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In his first annual message to Congress, December 3, 1889, President Harrison paid special attention to the coinage of silver under the Bland-Allison law of 1878. He said: -
"The total coinage of silver dollars was, on November 1, 1889, $343,638,001, of which $283,539,521 were in the Treasury vaults and $60,098,480 were in circulation. Of the amount in the vaults $277,319,-944 were represented by outstanding certificates, leaving $6,219,577 not in circulation and not represented by certificate"
In this message, President Harrison gave Congress and the people the clearest and fairest statement with reference to the number and circulation of silver dollars that was yet presented by any President up to his time.
Every one who would avail himself of the facts stated in this document knew, that, of the silver dollars coined under the Bland-Allison law of 1878, all were in active use and circulation except the small sum of $6,219,577.
The facts stated by President Harrison amply proved that the predictions and apprehensions of President Cleveland and others, with reference to the continued coinage of standard silver dollars, were absolutely groundless.
This remarkable absorption of silver in the channels of trade and commerce, evinced the great popularity of this money with the people.
The President further says: -
"The evil anticipations which have accompanied the coinage and use of the silver dollar have not been realized. As a coin it has not had general use, and the public Treasury has been compelled to store it.
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But this is manifestly owing to the fact that its paper representative is more convenient. The general acceptance and use of the silver certificate shows that silver has not been otherwise discredited."
It seems from the opinion of President Harrison, as expressed in this message, that the use of the silver certificate in lieu of the coin it represents, was the only evidence by which it was shown that silver was discredited.
If the issuance of silver certificates operates to discredit the silver dollar, then, by a parity of reasoning, the use of gold certificates as a substitute for gold coin discredits gold.
At the time the President stated that silver was discredited by the use of certificates, there were outstanding gold certificates aggregating $165,000,000.
If the holder of silver dollars deposits that coin in the Federal Treasury, and receives therefor silver certificates, and thus discredits the silver dollar, then the owner or holder of gold coin, or bullion, who deposits his coin or bullion in the Treasury, and accepts gold certificates, also discredits gold.
The partial eulogy bestowed by President Harrison upon silver was intended as a reflection upon those public utterances of Mr. Cleveland, in which the latter opposed the use of silver as money.
Farther on in the same message the President said: -
"I think it is dear that if we should make the coinage of silver at its present ratio free, we must expect that the difference in the bullion values of gold and silver dollars will be taken into account in commercial transactions, and I fear the same result would follow any considerable increase of the present rate of coin-
age."
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President Barren was an able lawyer, and was trained "To make the worse appear the better reason."
>From the tenor of the language of President Harrison first quoted, he delicately ridicules the severe strictures of President Cleveland upon silver as money, and he seeks to cast reproach upon the late administration.
In the language last quoted, the President, with the ability of a skilled special pleader, uses innuendo against free coinage, and he speaks of the difference in the bullion value respectively of gold and silver coin, as a great obstacle in the way of free coinage of the latter metal.
Having thus cunningly stated his objections to the free coinage of silver, he carried his fears from that subject into the system of government purchase of bullion, and its coinage into dollars under the Bland-Allison law, and he suggested that there is peril in the further continuation of the coinage of silver dollars.
At this time, Secretary Windom recommended his plan to Congress, which provided that any owner of silver bullion could deposit it in the Treasury, and receive therefor silver certificates upon the bullion value of the silver so deposited.
When Mr. Windom recommended this plan, the bullion value of the silver dollar was only seventy per cent. of the bullion value of the gold dollar, and the adoption of his plan by Congress would have created two classes of silver money and silver certificates.
The silver certificate issued under the Bland-Allison law would have represented far less bullion value than the certificates issued under his plan. It can be seen that the object of the Windom plan me to disparage
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the silver dollars and their paper representatives issued under the Bland-Allison law, and to supply the national banking money power with an opportunity to denounce the standard silver dollar as a "cheap dollar," a "dishonest dollar," a "70-cent dollar."
Then demands would be made upon the Government to protect its credit by redeeming the standard silver dollars in gold.
This would compel the issue of nearly $400,000,000 in interest-bearing bonds to secure gold for redemption purposes; and would have resulted in a contraction of the currency equal to the amount of standard silver dollars coined since February 28, 1878.
The Windom plan was transmitted to Congress, where it was introduced as House bill 5381.
On June 5, 1890, House bill 5381, known as the Windom Silver Bullion Purchase Bill, was pending in the House. Mr. Bland moved to recommit, with instructions to the committee to report back a bill for the free coinage of silver.
The motion was defeated by a vote of 116 yeas to 140 nays.
A substitute offered by Mr. Conger was then passed, and was known as House bill 5381.
On June 17th, House bill 5381 was reported by the Finance Committee of the Senate with sundry amendments; while it was pending, Mr. Plumb, of Kansas, offered an amendment for free and unlimited coinage of silver; which was agreed to by a vote of 43 yeas to 24 nays. The bill as amended into a free coinage measure was then passed by the Senate
On Jane 25th, the Senate bill came up in the House, and, after long wrangling, the Senate free coinage amendment was defeated.
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Both Houses appointed a Conference Committee which, after long deliberation, brought in a conference report.
In a speech on this conference report, Hon. R. P. Bland exposed the trickery of the Republican members of that committee in holding secret meetings to prevent the free coinage members from participating in its deliberations. He said: -
"Now, Mr. Speaker, the gentleman from Iowa [Mr. Conger) says this bill is the result of a free and fair conference. I deny it. We had but one meeting in which all the conferees were represented. That was the meeting appointed for last Thursday. We were to have another meeting of the conferees, but before the date of the meeting arrived, I was notified that my presence was no longer needed and that when my services were required, I would be notified. In the meantime, secret meetings or caucuses were held by the Republican members of that conference and this bill was concocted and prepared by them; and I never received a notice to attend another meeting of this conference until this bill was agreed to and the report was ready to be signed; and I was simply asked whether I agreed to it or not."
In the Senate debate on the bill reported by the Conference Committee, Senator Cockrell, of Missouri, pointed out that this measure was designed for the degradation of silver as a money metal, and that the Secretary of the Treasury was invested with such great powers that he could practically demonetize silver by refusing to pay it out for the redemption of the Treasury notes, which, under this act, would be issued to buy the silver bullion out of which silver dollars mere to be coined.
In reply to these remarks of Senator Cockrell, Sen-
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the amount of pure silver contained, and the amount of charges or deductions, if any, to be made.
"Section 5. That so much of the act of February 28, 1878, entitled 'An act to authorize the coinage of the standard silver dollar and to restore its legal tender character,' as requires the monthly purchase and coinage of the same into silver dollars of not less than $2,-000,000 nor more than $4,000,000 worth of silver bullion, is hereby repealed.
"Section 6. That upon the passage of this act the balances standing with the Treasurer of the United States to the respective credits of national banks for deposits made to redeem the circulating notes of such banks, and all deposits thereafter received for lite purpose, shall be covered into the Treasury as a miscellaneous receipt, and the Treasurer of the United States shall redeem from the general cash in the Treasury the circulating notes of said banks which may come into his possession subject to redemption; and upon the certificate of the Comptroller of the Currency that such notes have been received by him and that they have been destroyers and that no new notes will be issued in their place, reimbursement of their amount shall be made to the Treasurer, under such regulations as the Secretary of the Treasury may prescribe, from an appropriation hereby created, to be known as the national bank note redemption account; but the provisions of this act shall not apply to the deposits received under section 3 of the act of June 20, 1874 requiring every national bank to keep in lawful money with the Treasurer of the United States a sum equal to five per cent of its circulation, to be held and used for the redemption of its circulating notes; and the balance remaining of the deposits so covered shall, at the close of each month, be reported on the monthly public debt statement as debt of the United States bearing no interest.
"Section 7. That this act shall take effect thirty days from and after its passage."
This silver purchasing law, as it finally passed Con-
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gress, was the offspring of the fertile brain of John Sherman, and future events demonstrated that it was so cunningly planned that it terminated in mating silver a credit money.
Senator Sherman, who, as chairman of the Committee on Finance of the United States Senate, succeeded in getting this bill through Congress, afterward publicly stated that this measure was for the express purpose of defeating the free coinage of silver.
On August 30, 1893, Senator Sherman delivered a speech urging a speedy repeal of the lair for the passage of which he had bent all his energies to secure in 1890. He said: -
"Our Democratic friends have denounced this purchasing clause as a iniserable makeshift. It was a makeshift, but I think a good once defeat the free coinage of silver on the ratio of 16 to 1. I believe in this respect it has rendered the country an enormous service."
With unparalleled brazen effrontery, he stated in his Memoirs, lately published, that he would have voted for the repeal of this law within ten days after its passage, after he had by this means defeated the free coinage measure proposed by the Senate.
An examination of the provisions of the act of July 14,1890, in connection with the circumstances attending its passage, will exhibit some remarkable facts.
In substance, the Secretary of the Treasury was authorized to purchase, from time to time, silver bullion to the aggregate amount of 4,500,000 ounces, or as much thereof as would be offered in each month at the market price, not exceeding $1 for each 371.25 grains of pure silver. And in payment of such bullion, Treasury notes of the United States were to be
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prepared by the Secretary of the Treasury in denominations of not less than $1 nor more than $1,000. That the Treasury notes so issued should be redeemable on demand, in coin, at the Treasury of the United States, or at the office of any assistant treasurer of the United States, and, when so redeemed, could be reissued.
That no greater or less amount of such notes should be outstanding at any time than the cost of the silver bullion and the standard silver dollars coined therefrom, then held in the Treasury, purchased by such notes. That such Treasury notes should be a legal tender in payment of all debts, public and private, except where otherwise expressly stipulated in the contract. That such notes should be receivable for customs, taxes, and all public dues, and when so received could be reissued. That such notes could be counted a part of its lawful reserve by any National Banking Association. That, upon demand of the holder of any of the Treasury notes so issued, the Secretary of the Treasury should redeem such notes in gold or silver coin, at his discretion. That it was the established policy of the United States to maintain the two metals on a parity with each other upon the present legal ratio, or such ratio as may be provided by law.
Section 3 of this act was so cunningly contrived that it operated to hoard up the silver dollars coined under this law.
This section to which we direct the attention of the reader is as followers: -
"That the Secretary of the Treasury shall each month coin 2,000,000 ounces of the silver bullion purchased under the provisions of this act into standard silver dol-
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lars until the first day of July, 1891, and after that time he shall coin of the silver bullion purchased under the provisions of this act as much as may be necessary to provide for the redemption of the Treasury notes herein provided for."
The language of this section provided for the redemption of the Treasury notes in silver dollars, when not taken in connection with section 2.
The inference to be drawn from this language which we have quoted is, that for every dollar in Treasury notes emitted for the purchase of silver bullion, a sufficient number of dollars must be coined therefrom to redeem these notes. To maintain an adequate supply of such silver dollars available for the redemption of such notes, they must be kept inviolate in the Treasury for that identical purpose This mould prohibit them from going into circulation. Stored up in the Treasury vaults by a literal interpretation of this language, a large accumulation of these dollars would be inevitable, and would afford a President and Secretary of the Treasury, unfriendly to silver, an opportunity to point to them as evidence that they vere not desired as money for actual circulation. This was actually done by President Cleveland in his message of August 8, 1893, in which he advised the speedy repeal of the purchasing clause of this law. In that document, he pointed out that the silver coin and bullion in the Treasury had increased more than $147,000,000 between the 1st of July, 1890, up to the 15th of July, 1893.
Hence, it will be seen that the silver dollars coined under this law could be hoarded up in the Treasury at the mere will of the Secretary, while, at the same
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time, he could use his discretion in redeeming such Treasury notes wholly in gold.
This policy was carried into effect by Secretaries Foster and Carlisle.
Section 3 also provided that any gain or seigniorage, which would be the difference between the coinage value of the silver so purchased and its bullion value, should be paid into the Treasury.
Section 4 provided that so much of the Bland-Allison act of February 28, 1878, in so far as it required the monthly purchase and coinage of silver bullion into silver dollars of not less than $2,000,000 not more than $4,000,000 should be repealed.
Section 6 of this act provided that, upon its passage, the legal tender notes deposited by the national banks for the redemption of the circulating notes of such banks, and all deposits thereafter received for like purpose, should be paid into the Treasury as a miscellaneous receipt, and that national bank notes should bc redeemed out of a fund to be created and known as the national bank note redemption account.
When we construe the propositions embraced in the act of July 14, 1890, we ascertain,-
"First, That the free coinage system, which had existed prior to 1973, was absolutely destroyed by this enactment; and that the purchase of silver bullion by the Government made this metal a mere commodity; while the holder of gold was granted the privilege of taking his bullion to the mints and have it coined into money of unlimited legal tender debt-paying poorer.
"Second, That the purchase of 4,500,000 ounces of silver per month, would not exhaust its annual production, but a large surplus would remain on the market, the presence of which would inevitably result in a depreciation of its bullion value - the value of silver
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produced during 1890 was, $70,464,000 and its price per ounce was $1.05."
Therefore, the production of silver for that year was not less than 70,000,000 ounces. The total amount of silver provided for by the Sherman law was 54,000,000 ounces per annum, leaving an annual surplus of 16,-000,000 ounces to act as a depressing clement on the price of silver.
Moreover this surplus would accumulate year by year, gradually but surely lowering the bullion price of silver. In one respect, the policy embodied in the Sherman law was similar to that of the Bland-Allison law in this, that, while these two laws professed to solve the silver question, they aggravated the mischief by affording a greatly limited market for silver, and consequently a restricted demand for it with a resultant fall of price.
The abolition of free coinage of silver, and its purchase and coinage on government account alone, was adopted at the cunning suggestion and at the instigation of John Sherman.
The object of this policy, by which the Government purchased silver and coined it into dollars, was a shrewd scheme to make silver a mere credit money redeemable in gold alone. Should the silver dollars so coined fall in bullion value, a demand would be made upon Congress to maintain the public credit by guaranteeing the bullion parity of the silver dollar with that of gold.
Under the provisions of the Sherman law, the Secretary of the Treasury could go into the open market and bay silver from the lowest competitive bidder, and that process meant a continual fall in its price.
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The Government became a "bear" in the silver market.
One feature of the Sherman law that was extremely vicious, was couched in that provision forbidding the Secretary of the Treasury to pay more than one dollar for each 371.25 grains of pure silver. A maximum price was fixed beyond which the Secretary could not go; bet there was no minimum below which he could not buy. This provision was a statutory declaration of hostility toward silver.
The policy of England, in fixing the price of gold to be paid by the Bank of England, established a minimum, below which that bank. could not go on penalty of forfeiture of its charter.
The financial system of the United States, as it was embodied in the so-called Sherman law, aimed at the destruction of the value of silver, of which it was the largest producer in the world; the policy of Great Britain aimed at the enhancement of the value of gold, of which it was the largest holder.
In payment for the silver purchased, the Secretary of the Treasury was authorial to issue Treasury notes, redeemable on demand, in coin, at the Treasury of the United States, or at the office of any assistant treasurer of the United States, and when so redeemed, they could be reissued.
Coin meant gold and silver at the time this law came in force. While the first part of the act declared these notes redeemable in coin, a subsequent clause of the same section provided,-
"That upon demand of the holder of any of the Treasury notes herein provided for, the Secretary of the Treasury shall, under each regulations as he may
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prescribe,